saint acc549 full course latest 2017

Module 1 discussion What year did the FASB take on the responsibility of developing generally accepted accounting principles (GAAP)? Which body accepted the primary responsibility for the development of GAAP prior to the FASB? Do you believe the FASB should continue to be the organization primarily responsible for the development of GAAP? Why or why not? Module 2 discussion The balance sheet also known as the statement of position shows a company’s financial position at a point in time. Included on the balance sheet are various assets that are reported at an estimated value. Discuss the importance of the balance sheet to stakeholders including but not limited to investors creditors and governmental entities. With the core value of integrity in mind explain why it is important that management ensure the reliability of the estimates used by accountants and the information provided on the balance sheet. Module 3 discussion An income statement is a summary of revenues and expenses and gains and losses ending with net income for a specific period of time. Indicate the two traditional formats for presenting the income statement. Which of these formats is preferable for analysis? Why? Module 4 discussion Ratio analysis is quantitative analysis of information contained in a company’s financial statements. Commonsize analysis converts each line of financial statement data to an easily comparable amount measured as a percent. Both ratio analysis and common size analysis are important tools used to analyze the financial results of corporations. Explain the importance of both types of analysis. In your explanation it is imperative you provide examples of ratios with their measurement. Do you believe ratio analysis is better than common size analysis or vice versa? Why or why not? Module 5 discussion Companies carry various types of long-term assets on their books. These may include property plant and equipment investments in bonds investments in stocks patents and goodwill to name a few. Is it feasible for managers to get a precise measurement of the funds that could be available from long-term assets to pay long-term debts? Locate the annual report (10K) of a publicly traded company. Discuss the types of long-term assets on the books that could potentially be used to pay off the long-term debts. Is this company in a position to pay off all their long-term debts with their long-term assets? Module 6 discussion Profits might be compared with assets sales and stockholders’ equity. Why might all three bases be used? Will trends in these ratios always move in the same direction? Why? Compute the ratios for an actual company. Did the ratios move in the same direction from one year to the next? Module 7 discussion A member of the board of directors is puzzled by the fact that the firm has had a very profitable year but does not have enough cash to pay its bills on time. Explain to the director how a firm can be profitable yet not have enough cash to pay its bills and dividends. Module 8 discussion Financial ratios are used extensively to analyze interpret and explain the information provided in financial statements. Why do you believe this is so? Who are some of the stakeholders interested in financial ratios and analyses? Calculate 3 or 4 financial ratios of an actual company. Show how you calculated these ratios describe the meaning of the ratios you selected and discuss why you chose to calculate these ratios. ACC 549 Financial Statement Analysis Project Guidelines This project consists of six parts. You are to act as a financial advisor to a client interested in investing in a particular industry. You will research two separate companies in the same industry and provide a recommendation to your client which company if any he/she should invest in. One of the companies should be a U.S. public company (10-K Annual Report) the other company should be a foreign company listed on a U.S. exchange (20-F Annual Report). Good examples: Ford and Toyota. Part 1: Selection of companies Submit the names of your two public companies to the instructor for approval. Identify the industry they are in. Make sure one is a US Company and one is a Foreign Company listed on a US Exchange. Submit to the Dropbox no later than Sunday 11:59 PM EST/EDT of Module 1. Part 2: Obtain Financial Statements from SEC.GOV Obtain six years of financial statements for your company from SEC.gov. Do not use other sources (Yahoo Finance or the Company Website) to obtain this information. Resources: SEC Edgar Database at sec.gov 1. Go to www.sec.gov 2. Search for Company Filings 3. Enter Company Name example (Nike Inc.) 4. For the Annual Report select 10-K (or 20-F) 5. Select documents 6. Select form 10-K (or 20-F) 7. This is the entire annual report you only need the financial statements Submit to the Dropbox no later than Sunday 11:59 PM EST/EDT of Module 2. Part 3: Enter data into the FSAP (Financial Statement Analysis Package) Excel File Enter the Balance Sheet and Income Statement amounts for 5 years into the Financial Statement Analysis Package Excel file on the Data Tab of the FSAP. Resource: FSAP Excel file. Submit to the Dropbox no later than Sunday 11:59 PM EST/EDT of Module 3. Part 4: Company Analysis Write a brief description of the primary business activities for your assigned companies. Focus more on their position within the industry recent developments fluctuation in stock prices relative to the market/industry and other items of significance that would impact your investment decision. Do not focus on the history and background of the company but rather on information that would be relevant to decision makers. The paper should be 2-3 pages 12 pt. font single spaced. Resources: Annual Report (management discussion and analysis) Company website trade journals. Submit to the Dropbox no later than Sunday 11:59 PM EST/EDT of Module 4. Part 5: Industry Analysis Summarize the economic outlook for your industry. Look at recent market activity recent indicators impacting your industry. Address recent change in stock prices. Obtain industry averages for your ratio vertical and common size analysis (see the Analysis tab of the FSAP). Consider other expert buy/sell/hold opinions. The paper should be 1-2 pages 12pt. font single spaced. Resources: Standard and Poor’s Stock Reports or other Industry Surveys Mergent’s Industry Review Finance.yahoo.com moneycentral msn.com hoovers.com other financial websites annual reports and trade journals. Examine recommendations of other investment websites (buy/sell/hold). Incorporate peer reviewed academic research articles into your analysis. Analysis tab of the FSAP Excel file. Submit to the Dropbox no later than Sunday 11:59 PM EST/EDT of Module 5. Part 6: FINAL PAPER 1. Include Company Analysis (address prior comments): 2-3 pages 2. Include Industry Analysis (address prior comments): 1-2 pages 3. Include FSAP summary – Summarize the Analysis Tab of the FSAP which contains Ratios Horizontal Analysis and Common Size Analysis. Summarize the information in a professional and organized manor. Do not just cut and paste the information into your paper. 4. Write a summary of the significant findings from the financial statement analysis. This should be 2-3 single-spaced pages using 12-point font. Address the Company & Industry analysis. Address significant Ratios Horizontal Analysis and Common Sized Analysis from the FSAP (look under the Analysis Tab). Do not address all the ratios and every line of vertical and horizontal analysis just what you feel is important and significant to your decision. Focus on the specific items that stood out and impacted your decision. Include academic research to support your analysis. 5. Based on your findings which company if any would you invest in? Include specific support for your decision based on your findings in the analysis. Also include support (for or against) investing in the industry you chose. Include academic research to support your final decision. This should be one page 12-point font single-spaced. Resources: Textbook and Academic peer-reviewed journal articles. The Final Paper should be 6-9 single-spaced pages plus tables. Submit the Project Part 6: Final Paper to Chalk and Wire no later than Sunday 11:59 EST/EDT of Module 8. The Project Part 6: Final Paper Chalk and Wire link is located in the Module 8 folder. Students who do not submit the assignment to Chalk and Wire will receive a zero. This is a key program assessment; the results are used to ensure students are meeting program goals. Video and PDF instructions can be found on the course home page. PDF instructions are also located in the Start Here folder ACC549_Assignments by Teaching Faculty 1 Week Case Number 1 Case 1- 1 page 32 Case 2-2 page 83 2 Case 3 – 1 page 139 Case 3- 3 page 145 3 Case 4 – 4 page 193 Case 4- 5 page 193 5 Case 5- 4 page 222 (Use the 10-K for 2016) Case 6-1 page 263 Case 7-2 page 311 6 Case 7-11 page 320 Case 8-3 page 354 7 Case 9-1 page 383 Case 10-1 page 423 Case 10-2 page 424 Midterm exam Question 1 Listed below are several qualitative characteristics. Label the characteristic (or characteristics) that align with each statement. a. Understandability b. Usefulness for decision making c. Relevance d. Reliability e. Predictive f. Feedback value g. Timely h. Verifiable i. Representational faithfulness j. Neutrality k. Comparability l. Materiality m. Benefits of information should exceed its cost ___ 1. Two constraints included in the hierarchy. ___ 2. For this quality the information needs to have predictive and feedback value and be timely. ___ 3. These are the qualitative characteristics that are viewed as having the most importance. ___ 4. SFAC No. 2 indicates that to be reliable the information needs to have these characteristics. ___ 5. Interacts with relevance and reliability to contribute to the usefulness of information. ___ 6. Two primary qualities that make accounting information useful for decision making. ___ 7. For this quality the information must be verifiable subject to representational faithfulness and neutral. ___ 8. SFAC No. 2 indicates that to be relevant the information needs to have these characteristics. Question 2 Listed below is information related to several adjusting entry situations. Assume that the accounting year ends on December 31. a. $3 000 paid for insurance on October 1 for a one-year period (October 1 – September 30). This transaction was recorded as a debit to prepaid insurance ($3 000) and a credit to cash ($3 000). b. Interest on bonds payable in the amount of $500 has not been recorded at December 31. c. Rent expense in the amount of $1 200 was paid on November 1. This transaction was recorded as a debit to rent expense ($1 200) and a credit to cash ($1 200). This rent payment was for the period November 1 to January 31. Record the original entries and the adjusting entries using T-accounts Question 3 A partial list of accounts for Johnson and Clark in alphabetical order is presented below: Accounts Payable Interest Receivable Accounts Receivable Inventory¾Ending Balance Accrued Salaries Payable Land Accumulated Depreciation¾Buildings Land Held for Future Plant Site Accumulated Depreciation¾Equipment Loss on Sale of Equipment Additional Paid-In Capital¾Common Stock Marketable Securities Allowance for Doubtful Accounts Noncontrolling Interest Bank Loan (long-term) Notes Payable (long-term) Bonds Payable Obligations on Long-Term Loans Buildings Patent Cash in Bank Preferred Stock Commission Expense Premium on Bonds Payable Common Stock Prepaid Expenses Current Portion of Long-Term Debt Purchases Equipment Retained Earnings FICA Taxes Payable Sales Franchise Sales Salaries Expense Goodwill Treasury Stock Interest Income Unearned Rent Revenue Prepare a consolidated balance sheet in good format without monetary amounts for December 31 2012. Use the format Current Assets; Property Plant and Equipment; Investments; Intangibles; Current Liabilities; Long-Term Liabilities; and Stockholders’ Equity. Do not use the accounts not found on the balance sheet. Question 4 The following is a partial listing of accounts for Euisara Inc. for the year ended December 31 2012. Prepare a balance sheet in good format for December 31 2012. Finished Goods $ 9 718 Current Maturities of Long-Term Debt 1 257 Accumulated Depreciation 9 980 Accounts Receivable 24 190 Sales Revenue 127 260 Treasury Stock 251 Prepaid Expenses 2 199 Deferred Taxes (long-term liability) 8 506 Interest Expense 2 410 Allowance for Doubtful Accounts 915 Retained Earnings 18 951 Raw Materials 9 576 Accounts Payable 19 021 Cash and Cash Equivalents 8 527 Sales Salaries Expense 872 Cost of Goods Sold 82 471 Investment in Unconsolidated Subsidiaries 3 559 Income Taxes Payable 8 356 Work In Process 1 984 Additional Paid-In Capital 9 614 Equipment 41 905 Long-Term Debt 15 258 Rent Income 2 468 Common Stock 3 895 Notes Payable (short-term) 6 156 Income Tax Expense 2 461 Question 5 The income statement for Lifeline Products in single-step format follows. Lifeline Products Income Statement For the Year Ended December 31 2012 Revenues: Sales $3 000 000 Rent Income 14 000 $3 014 000 Costs and Expenses: Cost of Sales 2 370 000 Selling and Administrative Expenses 322 000 Interest Expense 48 000 Loss on the Sale of Plant Assets 16 000 $2 756 000 Income Before Taxes $ 258 000 Income Taxes 112 000 Net Income $ 146 000 Earnings per Share $ 7.30 a. Convert the statement to multiple-step format. b. Recompute net income with the unusual loss removed. c. Why may net income with the unusual loss removed be preferable to use for trend analysis? d. Speculate on why this loss is not considered extraordinary or as a disposal of a segment. Question 6 Comparative income statements for 2012 and 2011 follow. 2012 2011 Sales $9 434 000 $7 862 000 Cost of Sales 7 075 400 5 660 640 Gross Profit $2 358 600 $2 201 360 Operating Expenses 1 367 690 1 365 060 Operating Income $ 990 910 $ 836 300 Interest Expense 157 500 126 000 Earnings Before Tax $ 833 410 $ 710 300 Income Taxes 400 000 317 200 Net Income $ 433 410 $ 393 100 a. Prepare a vertical common-size analysis of this statement for each year using sales as the base. b. Comment briefly on the changes between the two years based on the vertical common-size statement. Question 7 Bill’s Produce does 60 percent of its business during June July and August. For Year Ended For Year Ended December 31 2012 July 31 2012 Net Sales $700 000 $690 000 Receivables less allowance for doubtful accounts: Beginning of period 45 000 80 000 (allowance January 1 $2 000; August 1 $3 000) End of period (allowance December 31 $3 000; 50 000 85 000 July 31 $3 500) a. Compute the days’ sales in receivables for July 31 2012 and December 31 2012 based on the data above. b. Compute the accounts receivable turnover for the period ended July 31 2012 and December 31 2012. c. Comment on the results from (a) and (b). Final exam Question 1 (1 point) Question 1 Unsaved The following information is computed from Fast Food Chain’s annual report for 2012. 2012 2011 Current assets $ 2 731 020 $ 2 364 916 Property and equipment net 10 960 286 8 516 833 Intangible assets at cost less applicable amortization 294 775 255 919 $13 986 081 $11 137 668 Current liabilities $ 3 168 123 $ 2 210 735 Deferred federal income taxes 160 000 26 000 Mortgage note payable 456 000 – Stockholders’ equity 10 201 958 8 900 933 $13 986 081 $11 137 668 Net sales $33 410 599 $25 804 285 Cost of goods sold (30 168 715) (23 159 745) Selling and administrative expense (2 000 000) (1 500 000) Interest expense (216 936) (39 456) Income tax expense (400 000) (300 000) Net income $ 624 948 $ 805 084 Note: One-third of the operating lease rental charge was $100 000 in 2012 and $50 000 in 2011. Capitalized interest totaled $30 000 in 2012 and $20 000 in 2011. a. Based on the above data for both years compute: 1. Times interest earned 2. Fixed charge coverage 3. Debt ratio 4. Debt/equity ratio 5. Debt to tangible net worth b. Comment on the firm’s long-term borrowing ability based on the analysis. Question 1 options: Save Question 2 (1 point) Question 2 Unsaved Company P had the following capital structure at year-end after closing. 6% Bonds $10 000 000 3% Preferred Stock 20 000 000 Common Stock ($10 par) 10 000 000 Paid-In Capital in Excess of Par 15 000 000 Retained Earnings 35 000 000 a. The return on common equity was 9%. Determine the net income assuming common stock dividends were declared and paid. b. Using your answer in (a) compute return on investment. Assume that the bond interest is the only interest expense and the tax rate is 50%. Use year-end balance sheet figures. c. Compute basic earnings per share. Assume the same number of common shares throughout the whole year. d. Compute book value per share. e. If the market value is $78 compute the price/earnings ratio using your answer to (c). f. Would you expect the market price to be higher than the book value per share? Question 2 options: Save Question 3 (1 point) Question 3 Unsaved The following statements are presented for Melvin Company. Melvin Company Balance Sheet December 31 2012 and 2011 Assets 2012 2011 Cash $ 625 $ 499 Marketable securities 260 370 Trade accounts receivable less allowances of 36 in 2012 and 18 in 2011 1 080 820 Inventories FIFO 930 870 Prepaid expenses 230 220 Total current assets $3 125 $2 779 Investments $ 820 $ 600 Property plant and equipment: Land $ 130 $ 127 Buildings and improvements 760 670 Machinery and equipment 2 100 1 400 $2 990 $2 197 Less allowances for depreciation 1 100 890 $1 890 $1 307 Goodwill 500 550 Total assets $6 335 $5 236 Liabilities and Shareholders’ Equity Accounts payable $1 200 $ 900 Accrued payroll 100 80 Accrued taxes 300 200 Total current liabilities $1 600 $1 180 Long-term debt 900 750 Deferred income taxes 300 280 Shareholders’ equity: Common stock 1 000 1 000 Retained earnings 2 535 2 026 Total liabilities and shareholders’ equity > Question 3 options: Save Question 4 (1 point) Question 4 Unsaved ABC Company has been a wholesale distributor of automobile parts for domestic automakers for 20 years. ABC has suffered through the recent slump in the domestic auto industry and its performance has not rebounded to the levels of the industry as a whole. ABC’s single-step income statement for the year ended November 30 2011 follows: ABC Company Income Statement For the Year Ended November 30 2011 (thousands omitted) Net sales $8 400 Expenses: Cost of goods sold 6 300 Selling expense 780 Administrative expense 900 Interest expense 140 Total 8 120 Income before income taxes 280 Income taxes 112 Net income $ 168 ABC’s return on sales before interest and taxes was 5% in fiscal year 2011 compared with the industry average of 9%. ABC’s turnover of average assets of four times per year and return on average assets before interest and taxes of 20% are both well below the industry average. Joe Kuhn president of ABC wishes to improve these ratios and raise them nearer to the industry averages. He established the following goals for ABC Company for fiscal year 2012: Return on sales before interest and taxes 8% Turnover of average assets 5 times per year Return on average assets before interest and taxes 30% For fiscal 2012 Kuhn and the rest of ABC’s management team are considering the following actions which they expect will improve profitability and result in a 5% increase in unit sales: 1. Increase selling price 10%. 2. Increase advertising by $420 000 and hold all other selling and administrative expenses at fiscal 2011 levels. 3. Improve customer service by increasing average current assets (inventory and accounts receivable) by a total of $300 000 and hold all other assets at fiscal 2011 levels. 4. Finance the additional assets at an annual interest rate of 10% and hold all other interest expense at fiscal 2011 levels. 5. Improve the quality of products carried; this will increase the units of goods sold by 4%. 6. ABC’s 2012 effective income tax rate is expected to be 40% – the same as in fiscal 2011. a. Prepare a single-step pro forma income statement for ABC Company for the year ended November 30 2012 assuming that ABC’s planned actions would be carried out and that the 5% increase in unit sales would be realized. b. Calculate the following ratios for ABC Company for the 2011-2012 fiscal year and state whether Kuhn’s goal would be achieved: 1. Return on sales before interest and taxes. 2. Turnover of average assets. 3. Return on average assets before interest and taxes. 4. Would it be possible for ABC Company to achieve the first two of Kuhn’s goals without achieving his third goal of 30% return on average assets before interest and taxes? Explain your answer. Question 4 options: