Sunday, 30 October 2016

ACCT 504 Accounting & Finance Managerial Use Complete Course Devry

ACCT 504 Accounting and Finance, Managerial Use and Analysis

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Week 1:

Week 1 DQ 1: Overview of Financial Statements and Environment of Financial Reporting
Financial Reporting Environment and GAAP (Graded)
The discussion in this area will revolve around what accounting is, who the key parties in the financial reporting process are, the role of generally accepted accounting principles in the preparation of financial statements, and the regulatory environment of financial reporting in the U.S. The information being discussed here will be found partly in Chapter 1 and Chapter 2.
Week 1 DQ 2: An Overview of Financial Statements and the Environment of Financial Reporting
Details of Financial Statements and Ratios (Graded)
In this thread, we will talk about the primary financial statements published by a corporation, the various classifications used in a balance sheet, the relationships among different financial statements, and how the numbers from the different financial statements are analyzed together to evaluate the financial position and performance of a company. The information being discussed here will be found partly in Chapter 1 and mostly in Chapter 2.
ACCT 504 Week 1 DQ 3   (An Overview of Financial Statements)
  • What is GAAP? What is the purpose of GAAP?
  • What is the purpose of a Balance Sheet? What information does it provide?

Week 2

ACCT 504 Week 2 DQ 1: The Accounting Information System and Accrual Accounting Concepts
Accounting Equation/Accounting Cycle (Graded)
In this area, we will discuss the significance of the accounting equation, the rules of debit and credit, and the steps in the accounting cycle. We will talk about recording of transactions, normal balances, and the creation of the trial balance. Let’s begin by asking this question: What is the role of the accounting equation in the analysis of business transactions?
ACCT 504 Week 2 DQ 2: The Accounting Information System and Accrual Accounting Concepts
Accrual Accounting and Adjusting Entries (Graded)
In this area, we will talk about the difference between cash-basis and accrual-basis accounting, the importance of revenue recognition and matching principles, and the role of adjusting and closing entries in the preparation of the income statement, statement of retained earnings, and balance sheet. How is cash-basis accounting different from accrual-basis accounting?
ACCT 504 Week 2 DQ 3
What is the role of the accounting equation in the analysis of business transactions?
Cash Basis Accounting Defined
Accrual Basis Accounting Defined

Week 3

ACCT 504 Week 3 DQ 1: Merchandising Operations and Inventory
Merchandising Operations and Income Statements (Graded)
In this area, we will discuss the accounting for inventory transactions of merchandising companies, the two formats of preparing the income statement, and how to evaluate the profitability of a merchandising company. How is the income statement of a merchandising company different from that of a service company?
ACCT 504 Week 3 DQ 2: Merchandising Operations and Inventory
Inventory Cost-Flow Assumptions (Graded)
In this area, we will talk about how companies determine the year-end inventory value and cost of goods sold using one of the cost-flow assumptions. We will also discuss the impact of choosing a certain cost-flow assumption on the tax liability and other financial statement numbers of a company. Finally, we will discuss how to analyze inventory numbers. Why is inventory important for a business? How is inventory different from other assets of the business?
ACCT 504 Week 3 Assignments:
ACCT 504 Week 3 Case Study 1 The Complete Accounting Cycle (Source 1)
ACCT 504 Week 3 Case Study 1 The Complete Accounting Cycle (Source 2)

Week 4

ACCT 504 Week 4 DQ 1: Receivables Understanding Internal Control and Reporting Cash (Graded)
In this thread, we will talk about the importance of internal control in a business organization and the definition and reporting of cash on the balance sheet. What is internal control and what are the objectives of a good internal control structure in an organization?
ACCT 504 Week 4 DQ 2: Cash and Receivables Accounting for and Reporting Receivables (Graded)
Receivables constitute an important line item on a company’s balance sheet. In this thread, we will discuss the accounting for receivables, the ways to estimate uncollectible accounts, and how companies manage their receivables. How do companies account for the possibility that some of their customers might not pay down the road?
ACCT 504 Week 4 Assignment:
ACCT 504 International Business & Career Research Part I & II). (450+ Words)

ACCT 504 Week 4 Midterm Exam Set 1

  1. (TCOs A, B, and C) Which of the following statements concerning users of accounting information is incorrect?
  2. (TCO C) Paying back long-term debt is an example of a(n)
  3. (TCO A) Resources owned by a business are referred to as
  4. (TCO A) On a classified balance sheet, prepaid expenses are classified as
  5. (TCO B) For 2012, LBJ Corporation reported net income of $40,000; net sales $1,400,000; and weighted average shares outstanding of 10,000. There were no preferred stock dividends. What was the 2012 earnings per share?
  6. (TCO D) Which of the following describes the normal balance and classification of the dividends account?
  7. (TCO E) The accrual accounting term used to indicate an item paid in advance or the receipt of cash in advance is
  8. (TCOs A and B) A perpetual inventory system would most likely be used by a(n)
  9. (TCOs A and B) LBJ Company recorded the following events involving a recent purchase of merchandise.
  10. (TCO A) In periods of rising prices, which of the following inventory methods results in the lowest income taxes?
  11. (TCO D) Describe the process of preparing a trial balance. What is the purpose of preparing a trial balance? If a trial balance does not balance, identify what might be the reasons why it does not balance. If the trial balance does balance, does that ensure that the ledger accounts are correct? Explain.

ACCT 504 Midterm Exam Set 2

  1. TCO A, B, C) Which of the following statements concerning users of accounting information is incorrect?
  2. (TCO C) Issuing shares of stock in exchange for cash is an example of a(n)
  3. (TCO C) Which activities involve putting the resources of the business into action to generate a profit?
  4. (TCO A) The cost of assets consumed or services used is also known as
  5. (TCO C) Edwards Company recorded the following cash transactions for the year
  6. (TCO A) On a classified balance sheet, prepaid insurance is classified as
  7. (TCO A) An intangible asset
  8. (TCO A) These are selected account balances on December 31, 2007………….What is the total NET amount of property, plant, and equipment that will appear on the……?
  9. (TCO B) For 2010, Landford Corporation reported net income of $30,000; net sales $400,000; and average share outstanding 6,000. There were no preferred stock dividends. What was the 2010 earnings per share?
  10. (TCO B) Liondale Corporation had beginning retained earnings of $2,292,000 and ending retained earnings of $2,499,000. During the year, they issued common stock totaling $141,000. There were no dividends issued. What was their net income for the year?
  11. (TCO D) On March 1, 2010, Dillon Company hires a new employee who will start the work on March 6. The employee will be paid on the last day of each month. Should a journal entry be made on March 6? Why or why not?
  12. (TCO D) Which one of the following is not a part of an account?
  13. (TCO D) Which of the following describes the classification and normal balance of the retained earnings account?
  14. (TCO D) A debit is the normal balance for which account listed below?
  15. (TCO D) Which of the following accounts follows the rules of debit and credit in relation to increases and decreases in the opposite manner?
  16. (TCO E) An accounting time period that is one year in length is called
  17. (TCO E) In a merchandising business, revenue may be considered earned when
  18. (TCO E) On April 1, 2010, M Corporation paid $48,000 cash for equipment that will be used in business operations. The equipment will be used for four years and will ….
  19. (TCO E) The following is selected information from M Corporation for the fiscal year ending October 31, 2010:…, what is M Corporation’s net income for the year ending….?
  20. (TCO E) Adjusting entries are made to ensure that
  21. (TCO A, B) Which of the following expressions is incorrect?
  22. (TCO B) Hunter Company purchased merchandise inventory with an invoice price of $3,000 and credit terms of 2/10, n/30…
  23. (TCO A, B) Jake’s Market recorded the following events involving a recent purchase of merchandise………As a result of these events, the company’s merchandise inventory:
  24. (TCO A) The factor which determines whether or not goods should be included in a physical count of inventory is……..
  25. (TCO A) Barnes Company is taking a physical inventory on March 31, the last day of its fiscal year. Which of the following must be included in this inventory count?
  26. (TCO A) A problem with the specific identification method is tha
  27. (TCO A) Which of the following statements is true regarding inventory cost flow assumptions?
  28. (TCO A) In periods of rising prices, the inventory method which results in the inventory value on the balance sheet that is closest to current cost is the
  29. (TCO B) Which of the following is a true statement about inventory systems?
  30. (TCO B) A merchandiser that sells directly to consumers is
  31. TCO D) A classmate is considering dropping his accounting class because he cannot understand the rules of debits and credits. Explain the rules of debits and …..
  32. (TCOs B & E) The Caltor Company gathered the following condensed data for the year ended December 31, 2010

ACCT 504 Midterm Exam Set 3

  1. (TCO A, B, C) Which of the following statements concerning users of accounting information is incorrect? (Points : 3) 
  2. (TCO C) Issuing shares of stock in exchange for cash is an example of a(n) (Points : 3)
  3. (TCO C) The statement of cash flows would disclose the payment of a dividend (Points : 3) 
  4. (TCO A) The cost of assets consumed or services used is also known as (Points : 3) 
  5. (TCO C) Finley Company recorded the following cash transactions for the year:….What was Finley’s net cash provided by operating activities? (Points : 3) 
  6. (TCO A) A current asset is (Points : 3) 
  7. (TCO A) Which of the following is not considered an asset? (Points : 3) 
  8. (TCO A) These are selected account balances on December 31, 2007….What is the total NET amount of property, plant, and equipment….? (Points : 3) 
  9. (TCO B) For 2007 Landford Corporation reported net income of $30,000; net sales $400,000; and average share outstanding 6,000. There were no preferred stock dividends. What was the 2007 earnings per share? (Points : 3) 
  10. (TCO B) Liondale Corporation had beginning retained earnings of $2,292,000 and ending retained earnings of $2,499,000. During the year, they issued common stock totaling $141,000. There were no dividends issued. What was their net income for the year? (Points : 3) 
  11. (TCO D) Is the purchase of equipment treated as an expense at the time of purchase? Why or why not? (Points : 3) 
  12. (TCO D) Which one of the following is not a part of an account? (Points : 3) 
  13. (TCO D) The classification and normal balance of the dividend account is (Points : 3)
  14. (TCO D) A debit is not the normal balance for which account listed below? (Points : 3) 
  15. (TCO D) Which of the following accounts follows the rules of debit and credit in relation to increases and decreases in the opposite manner? (Points : 3) 
Page Two 
  1. (TCO E) One of the accounting concepts upon which adjustments for prepayments and accruals are based is (Points : 3)
  2. (TCO E) In a merchandising business, revenue may be considered earned when (Points : 3)(TCO E) Why do generally accepted accounting principles require the application of the revenue recognition principle? (Points : 3)
  3. The following is selected information from M Corporation for the fiscal year ending October 31, 2007:
  4. (TCO E) The general term employed to indicate an expense that has not been paid or revenue that has not been received and has not yet been recognized in the accounts is (Points : 3)
  5. (TCO B) A merchandiser that sells directly to consumers is a (Points : 3)
  6. (TCO A,B) Detailed records of movements in merchandise (each purchase and sale) are not maintained in the inventory account in a (Points : 3)
  7. (TCO B) Hunter Company purchased merchandise inventory with an invoice price of $12,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Hunter Company pays within the discount period? (Points : 3)
  8. (TCO A) Zach’s Market recorded the following events involving a recent purchase of merchandise. As a result of these events, the company’s merchandise inventory (Points : 3)
  9. (TCO A) The factor which determines whether or not goods should be included in a physical count of inventory is (Points : 3)(TCO A) Which statement is false? (Points : 3)
  10. (TCO A) Which of the following items will increase inventoriable costs for the buyer of goods? (Points : 3)
  11. (TCO A) Which of the following statements is true regarding inventory cost flow assumptions? (Points : 3)
  12. (TCO A) In a period of declining prices, which of the following inventory methods generally results in the lowest balance sheet figure for inventory? (Points : 3)
  13. (TCO B) Which of the following is a true statement about inventory systems? (Points : 3)

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Week 5

Week 5: Long-Lived Assets and Liabilities, and Time Value of Money
Plant Assets and Intangibles (Graded)
Companies have a significant amount of investment in long-lived assets, which include property, plant and equipment (commonly referred to as Plant Assets), and intangible assets. Let’s begin by talking about plant assets. Can you tell us what kind of plant assets are used in your company or place of business? Do you have an estimate of the amount invested in those plant assets?
Week 5: Long-Lived Assets and Liabilities, and Time Value of Money
Accounting for Liabilities (Graded)
In this area, we will discuss different types of liabilities and understand how to account for and report those liabilities. Why are liabilities classified on a balance sheet as current and non-current? Who wants to know? What is the benefit of knowing this information?
ACCT 504 Week 5 Assignment:
ACCT 504 Week 5 Case Study internal Control

Week 6

Week 6 DQ 1: Stockholders’ Equity and Statement of Cash Flows
Accounting for and Reporting Equity (Graded)
Stockholders’ Equity is an important heading in a corporate balance sheet. Let’s begin the discussion of stockholders’ equity by asking: How is the stockholders’ equity section of a corporate balance sheet different from that in a single-owner business? Anybody?
Week 6 DQ 2: Stockholders’ Equity and Statement of Cash Flows
Statement of Cash Flows (Graded)
The statement of cash flows is an important financial statement that is required to be released along with the income statement and balance sheet by every publicly traded company. We did not have this requirement prior to the year 1988. Let’s begin our discussion by asking this question: When we already have the income statement and balance sheet to tell us about the financial performance and financial health of a company, why was there a need to require companies to prepare a statement of cash flows? Anybody?
ACCT 504 Week 6 Assignment:
ACCT 504 Week 6 Case Study 3 (Oxford Cash Budget Template).
ACCT 504 Week 6 Case Study 3 (Oxford Cash Budget).

Week 7

Week 7: Financial Analysis: The Big Picture – Discussion
Issues in Income Reporting (Graded)
By now, we all know that an income statement portrays the year-to-date performance of a business. However, the bottom-line figure in the income statement, i.e., net income, is influenced by what is reported in the statement under the categories of revenues and expenses. Therefore, readers of the income statement have to carefully examine the income statement in evaluating the future profitability of a business.
What is the concept of sustainable income? Can you describe in your own words, without just reproducing the definition from the textbook? Can you give an example of what this number may look like by using the income statement of a real-life company?
Week 7: Financial Analysis: The Big Picture
Different Tools for Financial Analysis (Graded)
There are different tools for analyzing the financial statements of a company, such as, horizontal analysis, vertical analysis, ratios for measuring financial health and profitability, etc. However, before we begin using these tools, it is important to know the purpose of each tool. Why do we need different tools for analyzing the financial statements? Don’t the numbers in the financial statements speak for themselves?
ACCT 504 Week 7 Course Project
Taking a Closer Look at Microsoft and Oracle 2006-2007 (4 Different Versions)
Ratio’s
Earnings per share PROFITABILITY       
Current ratio LIQUIDITY
Gross Profit Ratio PROFITABILITY             
Profit margin ratio PROFITABILITY
Inventory Turnover LIQUIDITY                    
Days in Inventory LIQUIDITY
Receivable Turnover Ratio LIQUIDITY   
Average Collection Period LIQUIDITY
Assets Turnover Ratio PROFITABILITY     
Return on Assets Ratio PROFITABILITY
Debt to Total Assets Ratio SOLVENCY
Times Interest Earned Ratio SOLVENCY
Payout ratio PROFITABILITY   
Return on Common Stockholders’ Equity
PROFITABILITY                                     
Free cash flow SOLVENCY
Current cash debt coverage ratio SOLVENCY
Price/Earnings ratio PROFITABILITY

ACCT 504 Final Exam Set 1

  1. Question: (TCO A) An advantage of the corporate form of business is that _____. (Points : 5)
  1. Question: (TCO A) When a corporation distributes a dividend, _____. (Points : 5)
  1. Question: (TCOs A, B) Below is a partial list of account balances for Denton Company:
  1. Question: (TCOs B, E) A small and private company may be able to justify using a cash basis of accounting if it has _____. (Points : 5)
  1. Question: (TCO D) In a period of increasing prices, which inventory cost flow assumption will result in the lowest amount of income tax expense? (Points : 5)
  1. Question: (TCOs A, E) Equipment was purchased for $60,000. Freight charges amounted to $2,800 and there was a cost of $8,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $12,000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be _____. (Points : 5)
  1. Question:  (TCOs D, G) Lopez Corporation issues 500 ten-year, 8%, $1,000 bonds dated January 1, 2007, at 96. The journal entry to record the issuance will show a _____. (Points : 5)
  1. Question: (TCO C) Accounts receivable arising from sales to customers amounted to $35,000 and $40,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $120,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is _____. (Points : 5)
  1. Question: (TCO F) Which one of the following is not a tool in financial statement analysis? (Points : 5)
  1. Question: (TCO F) In vertical analysis, the base amount for studying salary and wages expense is generally _____. (Points : 5)
  1. Question: (TCO F) Ratios are most useful in identifying _____. (Points : 5)
  1. Question: (TCO F) A common measure of liquidity is _____. (Points : 5)
  1. Question: (TCO F) Return-on-assets ratio is most closely related to _____. (Points : 5)
  1. Question: (TCO G) To calculate the market value of a bond, we need to _____. (Points : 5)

ACCT 504 Final Exam Set 2

Page 1
  1. Question:  (TCO A) Which one of the following is an advantage of corporations relative to partnerships and sole proprietorships? (Points : 5)
  2. Question:  (TCO A) When a corporation distributes a dividend, _____. (Points : 5)
  3.  Question:  (TCOs A, B) Below is a partial list of account balances for Cerner Company: (Points : 5)
  4. Question:  (TCOs B, E) A small and private company may be able to justify using a cash basis of accounting if it has _____. (Points : 5)
  5. Question:  (TCO D) Three companies report the same cost of goods available for sale, but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using _____. (Points : 5)
  6. Question:  (TCOs A, E) Equipment was purchased for $60,000. Freight charges amounted to $2,800 and there was a cost of $8,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $12,000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be _____. (Points : 5)
  7. Question:  (TCOs D, G) Mendez Corporation issues 2,000 ten-year, 8%, $1,000 bonds dated January 1, 2007, at 103. The journal entry to record the issuance will show a _____. (Points : 5)
  8. Question:  (TCO C) Accounts receivable arising from sales to customers amounted to $35,000 and $40,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $120,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is _____. (Points : 5)
  9. Question:  (TCO F) One variation of the horizontal analysis is known as _____. (Points : 5)
  10. Question:  (TCO F) In a common-size balance sheet, the 100% figure is _____. (Points : 5)
  11. Question:  (TCO F) In vertical analysis, the base amount for studying salary and wages expense is generally _____. (Points : 5)
  12. Question:  (TCO F) A common measure of profitability is the _____. (Points : 5)
  13. Question:  (TCO F) Return-on-assets ratio is most closely related to _____. (Points : 5)
  14. Question:  (TCO G) To calculate the market value of a bond, we need to _____. (Points : 5)
Page 2
  1. Question:  (TCO A) Below you will find selected information (in millions) from Coca-Cola Co.’s 2012 Annual Report: Required: 1. Using the information provided prepare a Balance Sheet. Separate the current assets from non-current assets and provide a total for each. Also separate the current liabilities from the non-current liabilities and provide a total for each.
  2. Using the Balance Sheet from your answer above calculate; Current Ratio, Days in Inventory, Average Collection Period, Return on Assets Ratio, Debt to Total Assets and Return on common stockholders’ equity ratio. (Make sure to show all your work) (Points : 36)
  3. Question:  (TCO B) The following selected data was retrieved from the Wal-Mart, Inc. financial statements for the year ending January 31, 2013: Required:Using the information provided above: 1. Prepare a multiple-step income statement 2. Calculate the Profit Margin, and Gross profit rate for the company. Be sure to provide the formula you are using, show your calculations, and discuss your findings/results. (Points : 36)
  4. Question:  (TCO C) Please review the following real-world Hewlett Packard Statement of Cash flows and address the 2 questions below: Required: 1) Please calculate the percentage increase or decrease in cash for the operating, investing, and financing sections and explain the major reasons for the increase or decrease for each of these sections. 2) Please calculate the free cash flow for 2012 and explain the meaning of this ratio. (Points : 36)
  5. Question: (TCO D) You are CFO of Goforit, Inc., a wholesale distribution company specializing in emerging technologies. Your CEO is a brilliant marketer, but relies on you to explain issues and choices in accounting and finance. She has heard from other members of a CEO organization to which she belongs that a company’s net income can vary widely depending on which accounting choices are made from the “GAAP menu.”…………(Points : 36)
  6. Question:  (TCO F) Please review the following real-world ratios for Johnson & Johnson and Pfizer for the year ended 2012 and address the 2 questions below…………….Required: 1) Please explain the meaning of each of the Pfizer ratios above. 2) Please state which company performed better for each ratio. (Points : 36)

ACCT 504 Final Exam Set 3

Page 1
  1. Question:  (TCO A) Which one of the following is an advantage of corporations relative to partnerships and sole proprietorships? (Points : 5)
  2. Question:  (TCO A) When a corporation distributes a dividend, _____. (Points : 5)
  3. Question:  (TCOs A, B) Below is a partial list of account balances for Cerner Company: (Points : 5)
  4. Question:  (TCOs B, E) Using accrual accounting, expenses are recorded and reported only _____. (Points : 5)
  5. Question:  (TCO D) Three companies report the same cost of goods available for sale, but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using _____. (Points : 5)
  6. Question:  (TCOs A, E) Equipment with a cost of $192,000 has an estimated salvage value of $18,000 and an estimated life of 4 years or 12,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours? (Points : 5)
  7. Question:  (TCOs D, G) Joyce Corporation issues 1,000 ten-year, 8%, $1,000 bonds dated January 1, 2007, at 102. The journal entry to record the issuance will show a _____. (Points : 5)
  8. Question:  (TCO C) Accounts receivable arising from sales to customers amounted to $80,000 and $70,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $240,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is _____. (Points : 5)
  9. Question:  (TCO F) One variation of the horizontal analysis is known as _____. (Points : 5)
  10. Question:  (TCO F) Comparisons of data within a company are an example of the following comparative basis. (Points : 5)
  11. Question:  (TCO F) Which one of the following is not a characteristic generally evaluated in ratio analysis? (Points : 5)
  12. Question:  (TCO F) Short-term creditors are usually most interested in assessing _____. (Points : 5)
  13. Question:  (TCO F) Long-term creditors are usually most interested in evaluating _____. (Points : 5)
  14. Question:  (TCO G) To calculate the market value of a bond, we need to _____. (Points : 5)
Page 2
  1. Question:  (TCO A) Below you will find selected information (in millions) from Coca-Cola Co.’s 2012 Annual Report:…………… Required:1. Using the information provided prepare a Balance Sheet. Separate the current assets from non-current assets and provide a total for each. Also separate the current liabilities from the non-current liabilities and provide a total for each.
  2. Using the Balance Sheet from your answer above calculate; Current Ratio, Days in Inventory, Average Collection Period, Return on Assets Ratio, Debt to Total Assets and Return on common stockholders’ equity ratio. (Make sure to show all your work) (Points : 36)
  3. Question:  (TCO B) The following selected data was retrieved from the Wal-Mart, Inc. financial statements for the year ending January 31, 2013:………….. Required:Using the information provided above: 1. Prepare a multiple-step income statement2. Calculate the Profit Margin, and Gross profit rate for the company. Be sure to provide the formula you are using, show your calculations, and discuss your findings/results. (Points : 36)
  4. Question: (TCO C) Please review the following real-world Hewlett Packard Statement of Cash flows and address the 2 questions below:…………. Required: 1) Please calculate the percentage increase or decrease in cash for the operating, investing, and financing sections and explain the major reasons for the increase or decrease for each of these sections. 2) Please calculate the free cash flow for 2012 and explain the meaning of this ratio. (Points : 36)
  5. Question:  (TCO D) You are CFO of Goforit, Inc., a wholesale distribution company specializing in emerging technologies. Your CEO is a brilliant marketer, but relies on you to explain issues and choices in accounting and finance. She has heard from other members of a CEO organization to which she belongs that a company’s net income can vary widely depending on which accounting choices are made from the “GAAP menu.”
  6. Question: (TCO F) Please review the following real-world ratios for Johnson & Johnson and Pfizer for the year ended 2012 and address the 2 questions below……………. Required:1) Please explain the meaning of each of the Pfizer ratios above. 2) Please state which company performed better for each ratio. (Points : 36)

ACCT 504 Final Exam Set 4 

  1. (TCO A) Which of the following is an advantage of the sole proprietorship relative to the corporate form of business organization? (Points : 5)
  2. (TCO A) Dividends _____. (Points : 5)
  1. (TCOs A, B) Below is a partial list of account balances for LBJ Company:
Cash                       $15,000
Prepaid insurance        5,000
Accounts receivable     2,500
Accounts payable        3,000
Notes payable             6,000
Common stock          10,000
Dividends                       500
Revenues                  15,000
Expenses                 13,000
What did LBJ Company show as total debits? (Points : 5)
  1. (TCOs B, E) Why is the accrual basis of accounting preferred by GAAP? (Points : 5)
  1. (TCO D) In a period of increasing prices, which inventory cost flow assumption will result in the highest amount of net income?(Points : 5)
  2. (TCOs A, E) Equipment was purchased for $75,000 on January 1, 2011. Freight charges of $3,200 were incurred and there was a cost of $6,000 for installation. It is estimated the equipment will have a $12,000 salvage value at the end of its 5-year useful life. Depreciation expense for 2011 using the straight-line method will be _____. (Points : 5)
  1. (TCO D,G) Payne Corporation issues 100 twenty-year, 6%, $1,000 bonds dated July 1, 2010, at 94. The journal entry to record the issuance will show a _____. (Points : 5)
  2. (TCO C) Accounts receivable arising from sales to customers amounted to $80,000 and $100,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $1,000,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is _____. (Points : 5)
  3. (TCO F) If you are making comparisons within a company to detect changes in financial relationships and significant trends, you are performing what type of analysis? (Points : 5)
  1. (TCO F) The formula for performing horizontal analysis is _____. (Points : 5)
  2. (TCO F) Horizontal analysis is a technique for evaluating a series of financial statement data over a period of time _____.(Points : 5)
  3. (TCO F) A common measure of liquidity is _____. (Points : 5)
  4. (TCO F) Short-term creditors would be most interested in which of the following ratios? (Points : 5)
  5. (TCO G) To calculate the market value of a bond, we need to _____. (Points : 5)
  6. (TCO A) Use the following partial financial statement information below to calculate the liquidity and profitability ratios. This information can be used to correctly solve each of the ratios below.
Average common shares outstanding            35,000    Current liabilities         $25,000
Capital expenditures                                  $20,000     Net income                $50,000
Cash provided by operations                       $77,000     Net sales                 $100,000
Preferred stock dividends paid                    $30,000     Total liabilities            $50,000
Current assets                                          $20,000     Total assets               $80,000
Instructions: Compute the following.
  1. a) Current ratio
  2. b) Working capital
  3. c) Earnings per share
  4. d) Debt-to-total-assets ratio
  5. e) Free cash flow
  6. (TCO D) The Oxford Company has budgeted sales revenues as follows.
Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month. Purchases of inventory are all on credit, with 60% paid in the month of purchase and 40% in the month following purchase. Budgeted inventory purchases are $260,000 in October, $180,000 in November, and $84,000 in December.
Other budgeted cash receipts include (a) the sale of plant assets for $49,400 in November and (b) the sale of new common stock for $67,400 in December. Other budgeted cash disbursements include (a) operating expenses of $27,000 each month, (b) selling and administrative expenses of $50,000 each month, (c) dividends of $76,000 to be paid in November, and (d) purchase of equipment for $24,000 cash in December.
The company has a cash balance of $40,000 at the beginning of December and wishes to maintain a minimum cash balance of $40,000 at the end of each month. An open line of credit is available at the bank and carries an annual interest rate of 12%. Assume that all borrowing is done on the first day of the month in which financing is needed and that all repayments are made on the last day of the month in which excess cash is available. Also assume that $14,000 of financing was obtained on November 1.
Requirements: Use this information to prepare a schedule of expected cash payments for purchases of inventory for the months of November and December only.
This question does not require creation of an entire cash budget so please only create the schedule that is asked for in the question because otherwise you will be wasting valuable time.
  1. (TCOs B, E) The following items are taken from the financial statements of Lansing Company for 2010.
  2. (TCO D) Your friend James has hired you to evaluate the following internal control procedures.
  3. (TCOs D, E) Please prepare the following journal entries. Indicate which account should be debited with the abbreviation DR in front of the account name and which account should be credited with the abbreviation CR in front of the account name along with the dollar amount of the debit and credit.
  4. (TCO C) Please indicate which section of the statement of cash flows should contain each of the following items and whether each item would result in an inflow or outflow of cash. The sections are Operating, Investing, and Financing.

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