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Business Plan
By
Kamilah T. Crooms

The name of my business is called DestinyWear. DestinyWear is a urban fashion
clothing company for woman, men and youth. DestinyWear specializes in making clothing
for every occasion. My name is Kamilah Crooms and I am the owner and CEO of
DestinyWear.My goal is to ensure that my company will be succesfull in all areas and in
each department. In order for me to make sure that the company was going to begin in the
right direction I had to priortize what was most important in establishing my business plan.
The main priority is that I had to first choose the appropriate business structure, a high
demanding product, and most of all an outstanding accounting team.

Business Structure
Upon establishing DestinyWear I had to decide which business struture that I felt was
best for me to pursue. I decided that as a Entreprenuer the best choice for me abd the
direction of the company would be for me to be sole proprietorship. Sole proprietorship
allowed me to be the sole owner of DestinyWear. The first and most important reason that I
wanted sole proprietorship is because it is much easier to start a business as sole
proprietorships. Sole proprietorship takes all the profit that and doesn't have to split it
between any other owners or corporations. I also want the power to make and change
decisions along the way without having to first consult anyone else.
DestinyWear Products
DestinyWear products will range from jeans, shirts, accessories and shoes. The
company will first start off with its most profitable product and that will be the DestinyWear
designer jeans line. The jeans line has over twenty different jeans designs
from straight leg, baggy, cargo, overalls, shorts and much more. The jeans line will provide
services within the United States and Canada and will eventually service International
customers. The DestinyWear jeans line will have its own building. In this building the bottom
floor will consist of the factory and the top floor will have the different departments such as
management, marketing and most importantly the accounting department.

DestinyWear Accounting Department
The accounting plays a major role in establishing my company DestinyWear. The
accounting department does more than managing and reporting the company’s financial
documents it is the greatest tool in establishing my business. The key to a powerful
accounting department here at DestinyWear is applying the principles of internal control.
These principles consist of establishment of responsibilities, segregation of responsibilities,
documentation procedures, Physical, mechanical, and electronic controls, Independent
internal verification and other controls such as Bonding of employees. In order to ensure
that this business plan works DestinyWear has to hire nothing but the best qualified
employees.
DestinyWear Accounting Staff
DestinyWear accounting team of fine employees will all be hired through the
company. There are several requirements that have to be met in order for myself as the
owner and Human Resource department to even consider the applicant for accounting. We
looked for characteristics, education and work history experience. The first and far most
important qualifying requirements are education. The applicant has to have a Bachelor
BA/BS in accounting degree a plus if he or she has a master’s.
The second requirement is experience. The applicant must have the minimum of five
years of experience working in accounting. He or She must have knowledge and
employment experience of working with financial statements, cash management and internal
control. Employees must be experienced in Invest idle cash, planning the timing of major
expenditures, delay payment of liabilities keeping inventory levels low, and increasing the
speed of collection on receivables. In the category of experience we had to hire applicants
according to the position that had to be filled in accounting. For example, if a position in
accounting such as management or supervisory needed to be filled, then we would look for
years of experience in management or supervisory positions. I personally prefer that every
employee have some type of management experience.

Last but not least, the employees characteristics. It is a must that every accounting staff
member has and applies professionalism, great ethic and moral skills, accuracy, and most
importantly punctuality, and reaching company deadlines. These characteristics are very
important to have at DestinyWear.
DestinyWear Accounting Management Team
The DestinyWear accounting management team will be reporting to me and to the
other head staff each week to report updates and any new changes. The management team
is responsible to have all the different types of budgeting reports that includes Sales, Labor,
etc. Management must follow the responsibility reporting system for each department. The
managers will use the company’s financial information to predict outcomes of the business. I
require a report from each responsibility center, cost center, profit center and investment
center to be reported each month. Management is responsible to ensure that the company
does not over or under budget and if any changes it must be reported immediately.
Conclusion
DestinyWear will be a very successful team not only because of the products that we
produce but because of having a great accounting team. With the help of accounting team I
DestinyWear products will be in every wardrobe in America.
REFERENCES
 //http:yourdictionary.com /CVP.org Retrieved 3/20/2010
 Thomas, Y. 2005-08-27 “Accounting 101 pg. 52
Statements. March 19, 2010

 Drucker, P. Managing in the next society 2002. retrieved
march 19,2010
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ACC 291 Final Exam Guide (New)
Discussion Question 1:
Based on what you know about accounting, what role do you see it
playing in business operations? How dependent do you think a
business is on its accounting department? Why?
Accounting plays many important roles especially when it comes to
business operations. Accounting is mainly responsible for almost all
of the financial needs of the business. It keeps track of all spending,
profit and loss that the company inquires.
Costco Wholesale Corporation
If we look at the financial statements of the company we can find that the company is financially
strong. Its strength are:

1. It has enough amount of current asset to repay its current liability. The current ratio of
the company 8.18 indicates that the company has $8.18 liquid asset to repay its $1 of
current liability.
2. The operating cost of the company is increasing because the company is able to
reduce its expenses.
3. Cash from operating activity has increased for the company.
Apart from this strength the company also has some weakness in its financial statement:
(i) Increasing inventory indicates that the company inventory conversion period is
increasing.
(ii) The cash from investing activity shows that the company cash outflow is more in
the short term investment i.e. in non operating activity.
(iii) The overall has for the year 2008 has declined for the company.
Net Income:
If we lookat the trend innet income of the companywe can findthat the companynetincome looks
fluctuating but it has improved it net income in 2008 as compared to 2007.
$950,000
$1,000,000
$1,050,000
$1,100,000
$1,150,000
$1,200,000
$1,250,000
$1,300,000
2006 2007 2008
Net Income
Net Income

Debt ratio as a percentage of total assets:
If we look at the debt ratio as percent of total asset we can find that the debt ratio is declining in
2008 as compared to 2007 i.e. the company is increasing equity to finance debt.
Debt as a percentage of total equity:
As we can see that the debt as percent of total equity is declining in 2008 as compared to 2007 i.e.
the company is increasing equity in its capital structure.
54.90%
55.00%
55.10%
55.20%
55.30%
55.40%
55.50%
55.60%
55.70%
55.80%
2007 2008
Debt ratio as percent of total asset
Debt ratio as percent
of total asset
122.50%
123.00%
123.50%
124.00%
124.50%
125.00%
125.50%
126.00%
126.50%
127.00%
2007 2008
Debt as percent of total equity
Debt as percent of
total equity

As we can see that there is nothing negative in 2008 for the company and this is the reason it has
positive trend as compared to 2007. Hence there is no need to correct anything for the company.
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ACC 291 Final Exam Guide
we have another New set of Final Exam Guide which could be found
on this link
Financial Statements
Today, I will be describing a balance sheet, income statement,
retained earnings statement, and statement of cash flows and how a
company uses these financial statements as a tool to make future
decisions for the company.
Balance Sheet
Week 1 DQ 1
Due Tuesday, Day 2

Go to the U.S. Securities and Exchange Commission’s Web site at
http://www.sec.gov and the Financial Accounting StandardsBoard’s
Web site athttp://www.fasb.org. Identify the mission and main
activities of each organization. Then, analyze the similarities and
differences between the roles of each entity. Which entity has more
influence over financial statement reporting? Explain your answer.
According to the SEC website their mission is to protect investors,
maintain fair, orderly, and efficient markets, and facilitate capital
formation. The SEC also requires public companies to disclose
meaningful financial and other information to the public. This
provides a common pool of knowledge for all investors to use to judge
for themselves whether to buy, sell, or hold a particular security. The
SEC is concerned primarily with promoting the disclosure of
important market-related information, maintaining fair dealing, and
protecting against fraud.
According to the FASB website the mission of the FASB is to establish
and improve standards of financial accounting and reporting that
foster financial reporting by nongovernmental entities that provides
decision-useful information to investors and other users of financial
reports. Since 1973, the Financial Accounting StandardsBoard
(FASB) has been the designated organization in the private sector for
establishing standards of financial accounting that govern the
preparation of financial reports by nongovernmental entities
The major difference in the SEC and the FASB is that the SEC deals
with reporting of financial statements for all industries while the
FASB deals mainly with the private nongovernmental entities. Both
are concerned with the fairness of financial reports and work in the
interest of the public. I believe that the SEC has more influence over
financial statement reporting because they can bring civil action
against companies and individuals for violations of securities laws.
Although according to the FASB website, “the Commission’s policy
has been to rely on the private sector for this function to the extent

that the private sector demonstrates ability to fulfill the responsibility
in the public interest.
Response 2
http://www.sec.gov and the Financial Accounting StandardsBoard’s
U.S. Securities and Exchange Commission (SEC)
According to the SEC’s website “The mission of the U.S. Securities
and Exchange Commission is to protect investors, maintain fair,
orderly, and efficient markets, and facilitate capital formation”(U.S.
Securities and Exchange Commission, 2010, Para. 1).
The main activities of the SEC are to interpret federal securities
laws; issue new rules and amend existing rules; oversee the
inspection of securities firms, brokers, investment advisers, and
ratings agencies; oversee private regulatory organizationsin the
securities, accounting, and auditing fields; and coordinate U.S.
securities regulation with federal, state, and foreign authorities. (U.S.
Securities and Exchange Commission, 2010)
Financial Accounting Standards Board (FASB)
According to the FASB’s website “The mission of the FASB is to
establish and improve standards of financial accounting and
reporting that foster financial reporting by nongovernmental entities
that provides decision-useful information to investors and other users
of financial reports. That mission is accomplished through a
comprehensive and independent process that encourages broad
participation, objectively considers all stakeholder views, and is

subject to oversight by the Financial Accounting Foundation’s Board
of Trustees” (Financial Accounting Standards Board, n.d., Para. 3).
The main activities of the FASB are to identify financial reporting
issues based on requests/recommendations from stakeholders or
through other means. The FASB Chairman decides whether to add a
project to the technical agenda, after consultation with FASB
Members and others as appropriate, and subject to oversight by the
Foundation'sBoard of Trustees. The Board deliberates at one or
more public meetings the various reporting issues identified and
analyzed by the staff. The Board issues an Exposure Draft to solicit
broad stakeholder input. (In some projects, the Board may issue a
Discussion Paper to obtain input in the early stages of a project) The
Board holds a public roundtable meeting on the Exposure Draft, if
necessary. The staff analyzes comment letters, public roundtable
discussion, and any other information obtained through due process
activities. The Board redeliberates the proposed provisions, carefully
considering the stakeholder input received, at one or more public
meetings. The Board issues an Accounting Standards Update
describing amendments to the Accounting Standards Codification
(Financial Accounting Standards Board, n.d.).
Both the SEC and the FASB have the same goals of fairness,
accuracy, and understandability of financial accounting and
reporting. Both agenecys accomplish these goals in the best interest
of the overall public.
The differences between the SEC and the FASB is that the FASB
regulates financial reporting in the private sector of businesses (but
are subject to the rules and regulations of the SEC) and the SEC deals
with regulating the financial reporting of publicly held corporations.
I believe that the SEC has the greatest influence over financial
statements reporting because they have the final approval on all
changes of the rules and regulations. The Sec can also bring civil or
administrative enforcement actions against individuals and
companies in violation of the securities laws.

References
Financial Accounting Standards Board. (n.d.). Facts about FASB.
Retrieved July 15, 2010, from Financial Accounting Standards
Board:http://www.fasb.org/facts/index.shtml#mission
U.S. Securities and Exchange Commission. (2010, May 3). The
Investors Advocate: How the SEC Protects Investors, Maintains
Market Integrity, and Facilitates Capital Formation. Retrieved July
15, 2010, from U.S. Securities and Exchange Commission:
http://www.sec.gov/about/whatwedo.shtml
Week 1 DQ 2
Due Thursday, Day 4
Search the Internet or the Online Library for information about the
Sarbanes-Oxley Act. A useful guide to some of these provisions is
located at http://www.soxlaw.com. Summarize at least two provisions
of the law, and discuss your interpretation of these provisions with
your classmates. Do you think this law will make financial statements
more reliable? Also, discuss how Sarbanes-Oxley establishes
boundaries to ensure ethical practices. What does the law allow or
prohibit, and why?
The Sarbanes-Oxley act has many provisions to give companies
guidelines for responsible, and ethical financial reporting. One of
those provisions is listed in Section 302 of the act. The provision is
that periodic statutory financial reports be certified that signing
officers have reviewed the reports, the report does not contain any
untrue, or misleading information. The financial statements fairly
present the financial condition. The signing officers are responsible

for internal controls. A list of all deficiencies in internal controls,
and a list of fraud involving employees, and anything that could
negatively affect the internal controls.
Another provision pertains to the "management assessment of internal
controls". This provision ensures that information is published in
annual reports regarding the adequacy of internal controls, structure
and procedures.
The Sarbanes-Oxley act is designed to help companies promote
ethical accounting procedures. The act gives guidelines as to how
financial statements are reported. The act requires verification that
officers within the company have checked the information in the
reports for accuracy and true. The act also requires that the
companies have internal controls in place to ensure ethical reporting
practices. The main thing that the Sarbanes-Oxley promotes is
transparency in reporting.
Response 2
Section 802 of the Sarbanes-Oxley Law defines the penalties that may
be assessed against individuals who failed to comply with the Act. An
individual could be subject to 20 years in jail for altering, destroying,
mutilating, concealing, falsifying records, documents or tangible
objects. Guilt is define by the intent to impede a legal investigation.
This part of the law gets to the heart of how Arthur Anderson reacted
by destroying documents important to Worldcom. The law further
defines that any accountant who knowingly violates their ethics by
wilfully violates the requirements of maintenance of all audit or
review papers. These papers are subject to review up to five years.
The second Section that I reviewed was the Section 302. This actually
is my favorite part of the law because it directly holds the officers and

directors accountable for the accuracy of reporting in their financial
statements. It defines that the management must review and
understand the financial statements and sign that they are true and
accurate. It also holds the management accountable for the internal
controls, requiring any deficiencies to be reported. In the past
directors of companies relied heavily on the internal officers,
management, to report the company performance without questioning
the accuracy or taking their role on oversight committees seriously.
They could hide behind a veil of trust of the key leaders. This Section
clearly puts the responsibility for the Board to remain independent of
the executives and function more effectively on the respective
oversight committees they serve. The example I would share is what
happened in WorldCom. The company leaders shared what they
wanted to with the Board, who trusted implicitly the top leaders. Had
they questioned their legal representation or auditors, they potentially
could have uncovered the fraud that was committed by the creation of
shell companies, with WorldCom employees as stockholders.
I would love to think this law would protect the investing community.
Financial reporting has improved to some extent. Unfortunately the
scams still continue. Example would be Barney Madoff or what
happened in the financial mortgage industry. These unethical
practices were conducted after Sarbanes Oxley was implemented.
Madoff was able to provide false financial information to investors.
Financial industry was allowed to get to aggressive in underwriting
and product suite. Fines and penalties are deterrents. Ethics still
must be inherent in an individual and company. Laws and
requirements are a guide. There will never be enough auditors,
inspectors or oversight boards to catch all of the fraud in the
corporate community.
The law prohibits falsifying information, failing to notify of material
changes, and destruction of records.
Statements

ACC 291 Final Exam Guide

ACC 291 Final Exam Study Guide
Question 207
On January 1, a machine with a useful life of five years and a residual
value of $40,000 was purchased for $120,000. What is the
depreciation expense for year 2 under the double-declining-balance
method of depreciation?
IFRS Multiple Choice Question 01 Lucent Technologies
Axia College of University of Phoenix
Lucent Technologies is a company based on networking for service
providers, government, and enterprises worldwide (Lucent
Technologies, n.d., Para 1). The products and services they work with
are separated into three categories; service and maintenance,
wireless mobility networking, and wire line networking. Lucent
Technologies is backed by Bell Labs, which does research and
development in networking technologies.

During the years 2001 to 2003 this company has experienced a
decrease in demand because of other companies’ loss or capital used
toward spending. This is mainly due to a downturn in the economy. As
an investor this information is necessary to know because it explains
the decrease or increase in sections of the balance sheet. In order to
compare the growth or decline of the company’s profit, an investor
must change a balance sheet into a common-size balance sheet. First
when looking at the balance sheet an investor will see that the amount
of paid in capital has increased from the year of 2003 to 2004, the
assets have increased, but the liabilities have decreased. When
running a debt/asset ratio it is noticed that this ratio drops from 1.2 in
2003 to 1.0 in 2004. This shows the company’s risk is low when
concerning financial leverage, usually when the debt ratio is less than
one percent it is financed mainly by company equity, so this company
is close to being debt free from creditors.
After changing the balance sheet to a common-size balance sheet
there are several factors an investor will look at. The current assets
have dropped to .48 from .49 in 2004. This does not show harm to the
company because only the accounts receivable dropped while the rest
of the current assets increased. This means the company is not in as
much danger of default on money owed to it. It does have a rise in
marketable securities. The one concern in the assets is the increase of
prepaid cost of pensions and goodwill. Goodwill can be used for tax
breaks but prepaid pensions cannot benefit the company.

When looking at the liabilities section an investor will see a drop in
pension and liabilities and an increase in long term debt, both of
these could be affected because of the drop in the economy. Long term
liabilities are often increased to help a company control interest rate
increases so as an investor cutting back on pension liabilities cuts
back cost to the company and watching interest rate increase show
the company is concerned with its earning and investors. This would
be encouraging or an investor. The stockholders deficit shows a drop
in accumulated deficits from -1.43 to -1.22 and total deficits of -.26 to
-.08. This shows the company is working to control any money loss
and turning it to the company’s advantage. Overall it shows the
company is still earning a profit although small. With an increase of
assets and a drop in liabilities the company is showing it is working in
a low risk capital.
After reviewing this information, a creditor or investor must be able
to compare this company to the industry totals. By comparing how
this company compares to other companies similar to it, a person can
see if it is competitive and worth taking a risk. Running ratios will
also show if the company is capable of paying off any debts it has or if
it can acquire the needed cash in case of emergencies. Overall as an
investor, I would say this company would be worth investing in.

Reference
Axia College. (2007). Understanding Financial Statements. Retrieved
May 10, 2010 from Axia College, Week 2 Assignment, ACC/230.
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ACC 291 Week 1 Assignment Comparative Analysis
Problem
Purpose of Assignment The purpose of this assignment is to help you
understand the basics of financial statement analysis using financial
ratios on the assets section of the balance sheet, data interpretation,
and how ratios are used to gain insight about the management of
receivable. Assignment Steps Resources: Financial Accounting
Differentiating Depreciation Methods
There is one main difference between straight line depreciation and
accelerated depreciation. Straight line is decided by taking the cost of
the assets, figuring out the salvage cost when the use of the asset is
finished and how many years of use the asset has. A person then
takes the cost minus salvage and divides the remainder by the
number of years of use. This amount is the depreciation expense
subtracted each year from the cost. The accelerated depreciation

does not have the same amount of deprecation subtracted each year.
It does have the cost minus salvage value to figure out the amount to
use but is then divided out differently. A person takes the sum of the
years of a product’s useful life, such as three years is 3 + 2 + 1 = 6,
then a person would divide the depreciation amount by 3/6 the first
year, 2/6 the second and finally 1/6 for the final year. So the amount
of depreciation expense is larger to smaller with accelerated and
equal amounts for straight line.
The advantages of straight line method are it is easier and faster to
figure. The advantage of accelerated method is it is more accurate
when figuring depreciation expense. The accelerated method has an
advantage and disadvantage concerning taxes. A company can use
the accelerated method to take advantage of bigger tax breaks at
the beginning of an assets life, but since this amount drops during the
lifespan if the company needs added tax breaks it will not receive
them from these assets in the future. With the straight line method
the amount of tax breaks are even through the life of the product.
Most companies choose this form of depreciation for reporting
purpose on taxes but will use the accelerated method to figure
taxable income.
As mentioned before the advantage of straight line depreciation is it
is easier to figure and uses the same total each year for deduction of
depreciation expense but the disadvantage is that if use for taxable
income and reporting a company does not get a bigger tax break at
the beginning of the assets life when they have just put out the cost
for the item and may need a bigger tax break.
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ACC 291 Week 1 Discussion Question 1

How would you describe the entries to record the disposition of
accounts receivables?
Preparing an Income Statement
The companies’ net income is profitable when the sales exceed the
cost of goods sold. In this, the gross profit is $761k.This is beneficial
to the company. Though we took the cost of goods away from the net
sales there are still other areas which need to take a piece of the pie.
For this company, once the SG&A and depreciation are taken out, the
company still contains a profit of $290k. But the buck does not stop
there. Once the interest income and interest expense are adjusted the
balance before earnings and taxes is $290k. After taxes are taken out,
the company is left with a net profit of $174k.
In this case I think the company has achieved success with a net profit
of $174k. If the company were unable to be profitable, the company
would eventually go out of business. We would be able to tell if the
company was not profitable by looking at each section individually.
The cost of goods sold is what stands out for me. If we pay more to
make the product then we are actually selling it for, there is no profit
to be made. So, I think it should all start there.

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How are bad debts accounted for under the direct write-off method?
Week 3 DQ 1
Due Tuesday, Day 2
Post your answer to Problem 3.5 on p. 109 (Ch. 3). How might the
information contained within the stockholder equity statement be used
for management and investor decision-making? Provide specific
examples of situations in which the stockholder equity information
might be used.
The statement of stockholders’equity provides the changes in the
equity accounts during the accounting period more in depth than the
balance sheet. The information found on the statement of
stockholders’equity includes retained earnings, common and
preferred stock, and additionalpaid in capital. Management uses the
statement of stockholders’equity to ensure they are reaching their
goal of maximizing shareholder's equity. The use of market ratios help
with the analysis of the statement of stockholders’equity, such as
earnings per share, price-to-earnings, dividend payout, and dividend
yield. These ratios will help both management and investors in

analyzing the company. For example, if I were looking to invest in a
company’s stocks I would utilize all of the financial ratios, as well as
the market ratios. The earnings per share ratio is calculated before
the price to earnings ratio, P/E, because the earnings per share ratio
is used in the second. If a company pays dividends, the dividend
payout ratio will come in handy. It tells us “The percentage of
earnings paid to shareholders in dividends” (Investopedia, 2010, p.
1).
References
Investopedia. (2010). Dividend Payout Ratio. Retrieved August 3,
2010, from
Investopedia:http://www.investopedia.com/terms/d/dividendpayoutrati
o.asp
Response 2
Explain what can be found on a statement of stockholders’equity.
The major elements of stockholders' equity include capital stock,
paid-in capital, retained earnings, treasury stock, unrealized loss on
long-term investments, and foreign currency translation gains and
losses.
How might the information contained within the stockholder equity
statement be used for management and investor decision-making?
Provide specific examples of situations in which the stockholder
equity information might be used.

Management may look at the stockholder’s equity statement retained
earnings section to determine if company should borrow money for
capital investments or finance it through various forms of equity. It
may also be used by the stockholder to evaluate the compensation
paid to the company officers. Investors may also look at the statement
for cumulative net unrealized gains and losses before purchasing
stock in the company. Investors are also interested in the paid in
capital because they can compare it to the additionalpaid in capital
and the difference between the two values will equal the premium
paid by investors over and above the par value of the shares.
DQ 2
Week 3 DQ 2
Due Thursday, Day 4
Provide an example from the text or the Internet that demonstrates a
situation in which a company’s net profits appeared good in the
statements, but the gross or operating profits presented a different
picture. Discuss how this might have occurred. Respond to the
following question, addressed in Problem 3.6 on p. 109 (Ch. 3): “Why
is the bottom-line figure, net income, not necessarily a good indicator
of a firm’s financial success?” Look for indicators like liquidity or
solvency to answer this discussion question.

An example that demonstrates the situation is Enron. Enron’s
financial statements did not show all the expenses and costs. Instead
of showing them on the income statement they made entries so the
cost and expenses would post in the balance sheet. The same was
done with the revenues. This way it would be less expenses and the net
profit appeared good. Many debts and losses were not reported in the
financial statements. From the third quarter of 2000 through the third
quarter of 2001, the directors fraudulently used reserve accounts
within Enron Wholesale to mask the extent and volatility of its
windfall trading profits, particularly its profits from theCalifornia
energy markets; avoid reporting large losses in other areas of its
business; and preserve the earnings for use in later quarters. By early
2001, Enron Wholesale's undisclosed reserve accounts contained over
$1 billion in earnings. The head of the company improperly used
hundreds of millions of dollars of these reserves to ensure that
analysts' expectations were met. In addition,Skilling and others
improperly used the reserves to conceal hundreds of millions of
dollars in losses within Enron's EES business unit from the investing
public.This would show the creditors that Enron was making profits
and its position was solid.
The net income is not necessarily a good indicator of a firm’s
financial success because the income statement only shows the profit
or loss at a period of time and does not show the whole picture of the
company. The Balance Sheet, Statement of cash flow, Statement of
shareholders’ equity and the Income Statement all together give the
real picture of the business. Each one of them shows different aspects
of the business. These statements show where the income is actually
coming from; is it from sales or from loans the company is
borrowing? If the company is selling a building or any other asset but
that does not mean that it is selling more products and making profit.
Looking at the Income Statements the company might be making
profit but at the same time it is extremely leveraged.

Response 2
A company’s net income is not the whole picture, just part of it. There
are lots of things that contribute to the net income that may not be
significative to the company’s success. If the value of a dollar has a
sudden change that can affect the bottom line if the company happens
to hold the medium of exchange that can benefit by the change that
might occur. The company can falsely inflate the bottom line. A
company’s net income is coupled with liabilities, cash flow, and
selects financial ratios. Looking at it this way is a much better way of
seeing what the company’s success is like. A company can change up
many things to make it look like their income is better. These things
that can be changed are single sales events, cash infusion, or false
financial statements. Some things like debt that a company has, the
company’s cash on hand, their capital assets conditions, or even their
sales trends. To figure the success of the company, you must look at
the whole picture. One thing cannot tell you all the facts of the
company’s affairs. You cannot tell the net income of the company just
from the bottom line. Look at all the financial records.
Response 3
Provide an example from the text or the Internet that demonstrates a
situation in which a company’s net profits appeared good in the
statements, but the gross or operating profits presented a different
picture. Discuss how this might have occurred. Respond to the
following question, addressed in Problem 3.6 on p. 109 (Ch. 3): “Why
is the bottom-line figure, net income, not necessarily a good indicator
of a firm’s financial success?” Look for indicators like liquidity or
solvency to answer this discussion question.
Net income is not necessarily a good indicator of a firm’s financial
success because they have ways to manipulate it by increasing their
revenues or hiding some of their expenses. For investors trying to
decide where to invest their money, they need to look more into
assessing how the company came up with the numbers they presented.

An example of this situation is when Laribee Wire Manufacturing Co.
exaggerated in recording their inventory value which allowed them in
acquiring loans from six banks totaling to about $130 million using it
as collateral. At the same time, they reported $3 million in net income
for the period, but in actuality they lost $6.5 million.
This company showed a higher net income by reporting fake inventory
in which its value was overstated and transferred over to their income
statement. When the banks assessed their financial statements, it was
enough to sway them into lending the loans they needed.
Reference:
Investopedia. (2010). Spotting Creative Accounting On The Balance
Sheet. Retrieved
fromhttp://www.investopedia.com/search/searchresults.aspx?q=Spotti
ng+Creative+Accounting+On+The+Balance+Sheet&submit=Search
-----------------------------------------------------
ACC 291 Week 1 Wileyplus Assignment E8-4, E8-11,
BYP8-1, and BYP8-2 (New)
Wiley Plus Assignment Week 1

·E8-4, E8-11, BYP8-1, and BYP8-2 in MS Excel
 Exercise 8-4 Wainwright Company
 Exercise 8-11 Fedex Corporation

 STOCKDIVIDEND

 Stock Split
 University of Phoenix

 Stock Dividend
 In the presenttime,the stockdividendhasbecome importantconcept.Whendividendis
giveninformof stock,itis calledstockdividend.Inthisformof dividend,the cashdoesnot
use.It isimportant,whenthe corporationdeclaresstockdividend,the marketvalue of the
share decreasesbecause the numberof stockincreases.The manycompaniespreferstock
dividenddue tothe tax benefit.If the individual getsstockdividend,he doesnotpayanytax
on stockdividend.Thusthe stockdividendreducestax burden. Onthe otherhand,the
ownershipof investorsalsospursupinthe companybecause the numberof holdingshare
increases.There isalsodisadvantageof stockdividend.The marketvalue of the share
decreases,sothe marketvalue of holdingalso decreases(Kennon, 2009).
 The ABC Companyisleadingcompanyinitsindustry.The numberof outstandingshare of
the companyis one million.Onthe otherhand,the numberof investorsisfive millions.The
value of marketcapitalizationis$100 million.The managementdeclares20% stockdividend.
Thus the 200000 shareswill be distributedasastock dividend. The numberof outstanding
share will be increasedby200000 and the new total numberof outstandingstockwill be 1.2
million.Onthe otherhand,the new value pershare inthe marketwill be $83.33 (100
million/1.2million).Thisexample istakenfrombelowmentionedlink:
 Stock Split

 The stock splitisalsoan importantconcept.Whenthe managementwantstoincreases
numberof shares,the management followsthismethod.Inthismethod,the face value of
the share is splitandnumberof share gets increased.Due toincrementinnumberof
outstandingshare,the marketvalue of pershare alsogetsaffectedbutthe total market
capitalizationof the companydoesnotaffect.Bothstocksplitandstock dividendincrease
numberof outstandingsharesbutbothare differentdue tothe accountingtreatment.Inthe
stock split,the investorsdonotgetany real benefit. Itisalsoknownas non-cash
distribution of dividend. The mottobehindstocksplitistoincrease tradingof the sharesin
the market(Baker,2009)
 For example,the face value of pershare is$100 and the total outstandingsharesare
100 million.If the managementof the companyannouncesstock splitinratioof 1:2, the
total outstandingshareswill be increasedby100 million,thusthe new total numberof the
share will be 200 million.Onthe otherhand,the face value of the share will reduce by50%.
So the newface value of the share will be $50. Due to effectof stock split,the holdingshare
of the investorwill alsoincrease inthe prorate basis.If the investorhas10 shares,now he
will have 20 shares.It isimportantthingthatthe total issuedcapital will notbe changed.
The illustrationof stocksplithasbeengotfromfollowinglink:
 Reverse Stock Split
 The reverse stocksplitisjustopposite of stocksplit.Inthisprocess,the management
reducesthe numberof outstandingshares.The companyincrease face valueof the share.In
thismethodcorporationdecidesaratiosuchas 2:1. Thus the company accumulates two
sharesinone share.In thismethod,the total marketvalue of companydoesnotchange.
Due to reverse stocksplit,the earningpershare andface value of per share rises.Thusthe
reverse stocksplitprovidesjustoppositeresultfromstocksplit.Itisimportantquestion,
whycompanyselectsthismethod.Whenthe managementseemsthatthe face value of the
share is lessascomparedto competitorsthenthe companygoesforthismethodtomake its

share value to equal tocompetitor’sshare’sface value.Itisalsoa soundstrategyto increase
treadingof shares.If the face value of share istoo cheapin comparisontocompetitors,the
investorswillbe discouragedforinvestment.Forincreasingthe confidence of investors,the
managementusesthismethod(Mladjenovic,2009).
 For example,aninvestorholds100 sharesof XYZ Companyand the face value pershare is
$50. If the managementgoforreverse stocksplitoptionanddeclaresone share for10
sharesthenthe holdingof the individual will reduce 9sharesforevery10 shares.Thus the
newholdingof the investorwill be 10 (100/10) sharesbutthe face value pershare will be
$500. It isalsoimportantthat the total marketcapitalizationwill remainassame asbefore
reverse split.The example of the reverse splitistake formbelow mentionedlink:
http://www.sec.gov/answers/reversesplit.htm.

 References
 Baker,H. K. (2009). Dividendsand Dividend Policy.JohnWileyandSons.
 Kennon,J.(2009). All AboutDividends.RetrievedMay31, 2010, from
http://beginnersinvest.about.com/od/dividendsdrips1/a/aa040904_2.htm
 Mladjenovic,P.(2009). Stock Investing forDummies.Dummies.

 -----------------------------------------------------
ACC 291 Week 2 - Fordyce and Atwater (New)
P10-5A
Fordyce Electronics issues a $400,000, 8%, 10-year mortgage note
on December 31, 2007. The proceeds from the note are to be used in
financing a new research laboratory. The terms of the note provide
for semiannualinstallment payments, exclusive of real estate taxes and
insurance, of $29,433. Payments are due June 30 and December 31.
Analyzing an Income Statement
The net income of Kodak has decreased a bit; it appears that the
company is more profitable. By conducting a side by side analysis
from 2004 to 2003 the company has increased in current assets and
decreased in total assets. It appears that the company went down in
property, plant and equipment net as well as discontinued operations.

So, despite the decrease in total assets it looks like the company has
made a good decision.
The company has also decreased its total liabilities by about 4%. I
believe this to be good because the short term borrowings and long
term debt has decreased. To me, this means that the company is
tightening their belt and paying off old debt.
Total shareholders’ equity has down a little bit in dollars, but on the
percentage level the company’s percentage has gone up. I believe this
is because the company issued $104k more shares in 2004 than in
2003. The company has the same amount of shares outstanding in
2004 that it did in 2003 as well. Retained earnings on the stock have
gone up in 2004 as well. I believe this is contributed by the more
shares that have been issued.
I believe the profitability of the company is under good standings.
They appear to be making the necessary adjustments in the company
to stay with in a profitable income.
-----------------------------------------------------
ACC 291 Week 2 Assignment Financial Reporting Problem,
Apple Inc

understand the basics of financial statement analysis related to the
assets section of the balance sheet, data interpretation, and how
financial information is obtained to understand how a company
accounts for its long-lived assets. Assignment Steps Resources: Cash
Flow Statement Analysis
Cash Flow Statement Analysis
The cash flow statement is important financial statement of the
corporation. The cash flow statement states from where cash has
come and where cash has been gone. Thus the cash flow statement
makes a relationship between beginning balance and ending balance
of cash. The cash flow statement is prepaid on the basis of income
statement and balance sheet of the company. The Little Bit Inc’s
beginning cash balance including marketable securities was $24000.
On the other hand, the ending cash balance including marketable
securities of the company was $40000 (Weygandt, Kimmel & Kieso,
2009).
The net income of the company was $5500 during 2009. The
company generated cash inflow from operating activity is less as
compared cash out flow from operating activities. The company
generated $9000 negative cash balance in operating activity section
of the cash flow statement. On the other hand, in the investment
section, the firm has also negative cash balance. The firm has $7000
negative balance in investment section of the cash flow statement.
The Little Bit Inc made investment during the year instead of selling
of assets. Last section of the cash flow statement is financing activity
section. In which, all finance related activities come. The corporation
sold some shares and borrowed some money from outside lenders

therefore the company has positive case balance by $32000 in
financing activity section.
Reference
Weygandt, J.J.,Kimmel, P.D. & Kieso, D.E. (2009). Managerial
Accounting: Tools for Business Decision Making. John Wiley and Sons.
-----------------------------------------------------
What are the differences among valuation, depreciation,
amortization, and depletion?
Week 5 DQ 1
Due Tuesday, Day 2

In what ways does the statement of cash flows relate to the balance
sheet and income statement?
It is important to understand what we are doing with the numbers and
the results these numbers give us because the result is the information
that will be available to us from financial statements. Although some
want to see the income statement and ignore the other statements we
need to use them together to see the total picture of what is happening
to our business. The relationship between the numbers on the
financial statements shows us everything we need to know about the
business.
The income statement shows income and expenses for a period of time
and if we are making or loosing money. The balance sheet compares
the assets to liabilities and shows how much money the business
would have if everything is sold today.
The statement of cash flow might be the most critical statement
because there is plenty of information we can gain form it. This
statement relates with the income statement on operating activities to
see if they are generating cash or not. It is related to the balance
sheet on how much cash is used in investing activities. In relationship
with the balance sheet the cash flow statement shows what cash is
provided or used by financing activities. It will tell us how much debt
has been paid and will indicated if we are using more debt or have
paid down the credit line.
When the business makes a sale or receives payment for a sale on
credit that is an inflow. A sale shows up as income on the profit and
loss statement and as an inflow on the cash flow statement. It also
shows up either as cash or accounts receivable on the balance sheet.
Also, how quickly we can collect on accounts receivable will play a
big role in the cash flow. When the business spends money, it shows
up as an expense in the profit and loss statement and as an outflow on
the cash flow statement. It also shows up on the balance sheet as a

decrease in cash, or an increase or decrease in liabilities, depending
on what the expense represents.
Response 2
In what ways does the statement of cash flows relate to the
balance sheet and income statement?
The cash flow statement relates to the income statement and balance
sheet. The net income from the income statement is listed on the
statement of cash flows. Operating activities are analyzed on the
statement of cash flows; this section of the statement reconciles the
net income to the actual cash the company received from or used
during operations. The second section of the statement of cash Flows
is the cash flow from investing activities which include purchase or
sale of assets. The last section in the Statement of Cash Flows is the
cash flows from financing activities that includes raising cash by
selling stocks/bonds or borrowing from backs; or cash out flows from
paying back loans. The balance sheet shows the different account
balances at the end of the accounting period. The statement of cash
flows reflects changes in the accounts listed on the balance sheet
between accounting periods. The net cash from operating, financing,
and investing activities are added up to calculate the net change in
cash.
Week 5 DQ 2
Due Thursday, Day 4
Discuss how the statement of cash flows is utilized by investors. If you
were an investor reviewing a statement of cash flows, what section

might interest you most? Why? Discuss the circumstances in which
other sections of the statement might be important to an investor.
Prior to making an investment in a company, one would want to
understand the decisions the owners are making to fund the
operations of the company daily. Maintaining sufficient cash to
acquire new product, pay overhead, and satisfy generated sales would
be the predominant need of the company. Second need would be for
the company to have sufficient cash to remain competitive. This may
require cash to invest in research and development, increase
inventory as new product introduction, improve efficiency in plant
and equipment, or cash to satisfy prior borrowing obligations. By
reviewing the statement of cash flow, the investor can determine if the
company is generating sufficient cash internally to fund operations or
are they requiring outside injection of cash to finance the short fall in
cash needed to operate the company. Last, the investor can review
the statement of cash flow to better understand the leverage of the
company and the requirement for repayment of debt, or dividends to
reward prior investments.
Response 2
Discuss how the statement of cash flows is utilized by investors. If you
were an investor reviewing a statement of cash flows, what section
might interest you most? Why? Discuss the circumstances in which
other sections of the statement might be important to an investor.
The statement of cash flow is utilized by investors because it has all
information integrated from the balance sheet and the income
statement. The statement of cash flow is used by an investor to see if
the operating activities are greater than the net income to have

earnings that are called “high quality”. If operating activities are
less, then a red flag will be raised as to why the net income is not
becoming cash. Another reason would be investors believe cash is the
best. The statement shows all cash coming and going from the
business. If the company generates additional cash than what is being
used, then the company can reduce their debt, acquire another
business, or buy some of the stock back. The last reason why would be
that financial models are based upon the statement of cash flow.
If I was an investor reviewing a statement of cash flows the section
that might interest me the most would be the operating activities. I
would like to know how the company was doing and what areas need
to be improved to have more cash generated in the business. All the
sections are important to an investor so they can see the complete big
picture of their investment.
-----------------------------------------------------
What types of industries have unearned revenue?
Why is unearned revenue considered a liability?
Candela Corporation

Candela Corporation
Candela Corporation and Subsidiaries have been working for
over 34 years developing and commercialize aesthetic laser systems
that allow physicians and personal care providers to treat a variety of
cosmetic and medical conditions such as removal of spider veins,
scars, stretch marks, warts, as well as hair removal and age spots,
freckles and tattoos. Other skin treatments such as psoriasis and acne
and acne scars are also treated. (Axia College, 2007)
Going from top to bottom on The Candela Corporation and
Subsidiaries Consolidated Statement of Cash Flows; for the operating
activities, 2002 shows an alarming loss in the net income while 2003
and 2004 for the company are showing a significant and steady climb
in the net income. In 2004 there was a new category added called
Provision for the disposal of discontinued operations and the
category has caused an increased the account for 2004. Loss from
discontinued operations grew from 2002 to 2003 but had a significant
decline for 2004. Depreciation has increased over the last 3 years as
well. Provision for bad debts increased significantly too, but an
increase in bad dept is expected as revenue increases. The provision
for deferred taxes shows the company went from a loss in 2002 and
2003 to show there was no tax loss in 2004. The tax benefit from
exercised stock options has practically doubled sense 2003. The
changes in assets and liabilities for the last 3 years have been up and
down. Receivables have increased, notes receivable decreased, and
inventories have increased. Other current assets, other assets have
also increased. Accounts payable has made a significant decrease in
the last 3 years as well as accrued payroll expenses. The accrued
payroll decreasing could mean that the amount of employees over the
years has decreased as well. The accrued warranty costs have
increased as well; this could mean that the company renewed
equipment warranties. The net cash provided by operating activities
looks to have gone from a loss in 2002 to a large profit in 2003 and
then a decrease, yet still a profit for 2004. It appears on the
operations level that management needs to do more to regulate the
company’s finances so there is not an up and down variance each
year.

The cash flow from investing activities shows me that in the last
three years they had large amount of investments in 2002 and 2003
but now they are letting them decrease.
The cash flow from financing activities states that the proceeds
from issuance of common stock have increased significantly from
2002 to 2003 and rose a little more in 2004. The repurchases of stock
has not happened sense 2002 and the principle payment of long-term
debt grew in 2003 from 2002 and shows no activity for 2004. Same
goes for the net borrowing on line of credit; it appears that Candela
Corporation is current on payments to line of credit. So, the net cash
from financial activities looks great for 2004. The cash and cash
equivalents for each year have increased steadily.
After reviewing the consolidated statement of cash flows for
Candela Corporation, I believe the company is making a profit, but
perhaps need some control over their operating activities.

Reference
Axia College. (2007). Statement of Cash Flows. Retrieved June 14,
2010 from Axia
College, Week Six, ACC 230.
? -----------------------------------------------------
ACC 291 Week 2 Individual WileyPLUS Assignment Week
Two
we have another New set of week 2 Willeyplus assignment which
could be found on this link

Resource:WileyPLUS
Complete the followingWileyPLUS Week Two Exercises and
Problem:
Analyzing Statements of Cash Flows
4.8. Research Problem
Choose five companiesfromdifferentindustriesandlocate theirstatementsof cashflows
for the mostrecentyear.
(a) Create a table tocompare the dollarsprovidedorusedbyoperating,investing,andfinancing
activities,aswell asthe overall increase ordecrease incash.
(b) Create a secondtable foreach companycomparingthissame informationforeachof the three
yearspresentedinthatcompany’sstatementof cashflows.Includeanadditional columnthatlooks
at the combinedcashflowsforall three years.
(c) Write a short analysisof the informationgathered.Yourdiscussionshouldaddress,amongother
things,whethercashflowfromoperatingactivitiesislarge enoughtocoverinvestingandfinancing
activities,andif not,howthe companyisfinancingits activities.Discussdifferencesandsimilarities
betweenthe companiesyouhave chosen.
(a) Create a table tocompare the dollarsprovidedorusedbyoperating,investing,andfinancing
activities,aswell asthe overall increase ordecrease incash.
STATEMENT OF CASH FLOW ANALYSIS
STARBUCKS HARELY DAVIDSON RITE AID
2008 2008 2008
NET INCOME / STARTING LINE
$
315.5 $ - $ (1,079.0)
OPERATING ACTIVITIES $ 1,258.7 $ (684.7) $ 79.4
INVESTING ACTIVITES
$
(1,086.6) $ (393.3) $ (2,933.7)

FINANCING ACTIVITIES $ (184.5) $ 1,293.4 $ 2,904.0
CASH $ (11.5) $ 190.7 $ 49.9
(b) Create a secondtable foreach companycomparingthissame informationforeachof the three
yearspresentedinthatcompany’sstatementof cashflows.Includeanadditional columnthatlooks
at the combinedcashflowsforall three years.
STARBUCKS
2008 2007 2006
Net Income/Starting Line 315.5 672.64 564.26
Cash from Operating Activities 1258.70 1331.22 1131.63
Cash from Investing Activities -1086.60 -1201.95 -841.04
Cash from Financing Activities -184.50 -171.89 -155.33
Net Change in Cash -11.50 -31.35 138.80
Net Cash - Beginning Balance 281.30 312.61 173.81
Net Cash - Ending Balance 269.80 281.26 312.61
HARLEY DAVIDSON
2008 2007 2006
Net Income/Starting Line 0 933.84 1043.15
Cash from Operating
Activities -684.65 798.15 761.78
Cash from Investing
Activities -393.25 391.21 -35.26
Cash from Financing
Activities 1293.39 -1037.80 -637.02
Net Change in Cash 190.70 164.46 97.42
Net Cash - Beginning
Balance 402.85 238.40 140.98

RITE AID
2008 2007 2006
Net Income/Starting Line -1078.99 26.83 1273.01
Cash from Operating Activities 79.37 309.15 417.17
Cash from Investing Activities -2933.74 -312.78 -231.08
Cash from Financing Activities 2903.99 33.72 -272.84
Net Change in Cash 49.61 30.08 -86.75
Net Cash - Beginning Balance 106.15 76.07 162.82
(c) Write a short analysisof the informationgathered.Yourdiscussionshouldaddress,amongotherthings,wheth
howthe company isfinancingitsactivities.Discussdifferencesandsimilaritiesbetweenthe companiesyouhave c
Starbucksoperatingcashflowhasgone up in 2007 anddecreasedalittle in2008. The netchange incash for Starb
yearis decreasingfromthe previousyear. This couldmeanthatthisyearthere can be a gain.
HarleyDavidson'soperatingcashflow hassignificantlydecreasedfrom2007. It appearsthe companywason an u
informationsuppliedfornetincome. Withthe economythe wayitisand not manypeople buyingatthispointco
couldreflectapositive gain.
Rite Aid'soperatingcashflowhastakena significantdecreaseaswell frompreviousyears.Although,aftertaking
beeninpreviousyears. Rite Aid’snetgainincashcouldbe fromthe evergrowingneedsinmedical supplies. Thi

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ACC 291 Week 2 IndividualWileyPLUS PracticeCh 8,9,10
Quiz
Resource:WileyPLUS
Complete the WileyPLUS Week Two Practice Quizzes for chapters 8,
9, and 10 Week 1 DQ 1
Due Tuesday, Day 2
http://www.sec.gov and the Financial Accounting Standards Board’s

According to the SEC website their mission is to protect investors,
maintain fair, orderly, and efficient markets, and facilitate capital
formation. The SEC also requires public companies to disclose
meaningful financial and other information to the public. This
provides a common pool of knowledge for all investors to use to
judge for themselves whether to buy, sell, or hold a particular
security. The SEC is concerned primarily with promoting the
disclosure of important market-related information, maintaining fair
dealing, and protecting against fraud.
According to the FASB website the mission of the FASB is to establish
and improve standards of financial accounting and reporting that
foster financial reporting by nongovernmental entities that provides
decision-useful information to investors and other users of financial
reports. Since 1973, the Financial Accounting Standards Board (FASB)
has been the designated organization in the private sector for
establishing standards of financial accounting that govern the
preparation of financial reports by nongovernmental entities
The major difference in the SEC and the FASB is that the SEC deals
with reporting of financial statements for all industries while the
FASB deals mainly with the private nongovernmental entities. Both
are concerned with the fairness of financial reports and work in the
interest of the public. I believe that the SEC has more influence over
financial statement reporting because they can bring civil action
against companies and individuals for violations of securities laws.
Although according to the FASB website, “the Commission’s policy
has been to rely on the private sector for this function to the extent

that the private sector demonstrates ability to fulfill the responsibility
in the public interest.
Response 2
http://www.sec.gov and the Financial Accounting Standards Board’s
U.S. Securities and Exchange Commission (SEC)
According to the SEC’s website “The mission of the U.S. Securities
and Exchange Commission is to protect investors, maintain fair,
orderly, and efficient markets, and facilitate capital formation”(U.S.
Securities and Exchange Commission, 2010, Para. 1).
The main activities of the SEC are to interpret federal securities
laws; issue new rules and amend existing rules; oversee the
inspection of securities firms, brokers, investment advisers, and
ratings agencies; oversee private regulatory organizations in the
securities, accounting, and auditing fields; and coordinate U.S.
securities regulation with federal, state, and foreign authorities. (U.S.
Securities and Exchange Commission, 2010)
Financial Accounting Standards Board (FASB)
According to the FASB’s website “The mission of the FASB is to
establish and improve standards of financial accounting and
reporting that foster financial reporting by nongovernmental entities

that provides decision-useful information to investors and other users
of financial reports. That mission is accomplished through a
comprehensive and independent process that encourages broad
participation, objectively considers all stakeholder views, and is
subject to oversight by the Financial Accounting Foundation’s Board
of Trustees” (Financial Accounting Standards Board, n.d., Para. 3).
The main activities of the FASB are to identify financial reporting
issues based on requests/recommendations from stakeholders or
through other means. The FASB Chairman decides whether to add a
project to the technical agenda, after consultation with FASB
Members and others as appropriate, and subject to oversight by the
Foundation's Board of Trustees. The Board deliberates at one or more
public meetings the various reporting issues identified and analyzed
by the staff. The Board issues an Exposure Draft to solicit broad
stakeholder input. (In some projects, the Board may issue a
Discussion Paper to obtain input in the early stages of a project) The
Board holds a public roundtable meeting on the Exposure Draft, if
necessary. The staff analyzes comment letters, public roundtable
discussion, and any other information obtained through due process
activities. The Board redeliberates the proposed provisions, carefully
considering the stakeholder input received, at one or more public
meetings. The Board issues an Accounting Standards Update
describing amendments to the Accounting Standards Codification
(Financial Accounting Standards Board, n.d.).
Both the SEC and the FASB have the same goals of fairness,
accuracy, and understandability of financial accounting and
reporting. Both agenecys accomplish these goals in the best interest
of the overall public.

The differences between the SEC and the FASB is that the FASB
regulates financial reporting in the private sector of businesses (but
are subject to the rules and regulations of the SEC) and the SEC deals
with regulating the financial reporting of publicly held corporations.
I believe that the SEC has the greatest influence over financial
statements reporting because they have the final approval on all
changes of the rules and regulations. The Sec can also bring civil or
administrative enforcement actions against individuals and
companies in violation of the securities laws.
References
Financial Accounting Standards Board. (n.d.). Facts about FASB.
Retrieved July 15, 2010, from Financial Accounting Standards
Board:http://www.fasb.org/facts/index.shtml#mission
U.S. Securities and Exchange Commission. (2010, May 3). The
Investors Advocate: How the SEC Protects Investors, Maintains
Market Integrity, and Facilitates Capital Formation. Retrieved July 15,
2010, from U.S. Securities and Exchange Commission:
http://www.sec.gov/about/whatwedo.shtml

Week 1 DQ 2
Due Thursday, Day 4
Search the Internet or the Online Library for information about the
Sarbanes-Oxley Act. A useful guide to some of these provisions is
located at http://www.soxlaw.com. Summarize at least two
provisions of the law, and discuss your interpretation of these
provisions with your classmates. Do you think this law will make
financial statements more reliable? Also, discuss how Sarbanes-Oxley
establishes boundaries to ensure ethical practices. What does the law
allow or prohibit, and why?
The Sarbanes-Oxley act has many provisions to give companies
guidelines for responsible, and ethical financial reporting. One of
those provisions is listed in Section 302 of the act. The provision is
that periodic statutory financial reports be certified that signing
officers have reviewed the reports, the report does not contain any
untrue, or misleading information. The financial statements fairly
present the financial condition. The signing officers are responsible
for internal controls. A list of all deficiencies in internal controls, and
a list of fraud involving employees, and anything that could
negatively affect the internal controls.
Another provision pertains to the "management assessment of
internal controls". This provision ensures that information is
published in annual reports regarding the adequacy of internal
controls, structure and procedures.
The Sarbanes-Oxley act is designed to help companies promote
ethical accounting procedures. The act gives guidelines as to how

financial statements are reported. The act requires verification that
officers within the company have checked the information in the
reports for accuracy and true. The act also requires that the
companies have internal controls in place to ensure ethical reporting
practices. The main thing that the Sarbanes-Oxley promotes is
transparency in reporting.
Response 2
Section 802 of the Sarbanes-Oxley Law defines the penalties that may
be assessed against individuals who failed to comply with the Act. An
individual could be subject to 20 years in jail for altering, destroying,
mutilating, concealing, falsifying records, documents or tangible
objects. Guilt is define by the intent to impede a legal investigation.
This part of the law gets to the heart of how Arthur Anderson reacted
by destroying documents important to Worldcom. The law further
defines that any accountant who knowingly violates their ethics by
wilfully violates the requirements of maintenance of all audit or
review papers. These papers are subject to review up to five years.
The second Section that I reviewed was the Section 302. This actually
is my favorite part of the law because it directly holds the officers and
directors accountable for the accuracy of reporting in their financial
statements. It defines that the management must review and
understand the financial statements and sign that they are true and
accurate. It also holds the management accountable for the internal
controls, requiring any deficiencies to be reported. In the past
directors of companies relied heavily on the internal officers,

management, to report the company performance without
questioning the accuracy or taking their role on oversight committees
seriously. They could hide behind a veil of trust of the key leaders.
This Section clearly puts the responsibility for the Board to remain
independent of the executives and function more effectively on the
respective oversight committees they serve. The example I would
share is what happened in WorldCom. The company leaders shared
what they wanted to with the Board, who trusted implicitly the top
leaders. Had they questioned their legal representation or auditors,
they potentially could have uncovered the fraud that was committed
by the creation of shell companies, with WorldCom employees as
stockholders.
I would love to think this law would protect the investing community.
Financial reporting has improved to some extent. Unfortunately the
scams still continue. Example would be Barney Madoff or what
happened in the financial mortgage industry. These unethical
practices were conducted after Sarbanes Oxley was implemented.
Madoff was able to provide false financial information to investors.
Financial industry was allowed to get to aggressive in underwriting
and product suite. Fines and penalties are deterrents. Ethics still
must be inherent in an individual and company. Laws and
requirements are a guide. There will never be enough auditors,
inspectors or oversight boards to catch all of the fraud in the
corporate community.
The law prohibits falsifying information, failing to notify of material
changes, and destruction of records.

-----------------------------------------------------
ACC 291 Week 2 Learning Team Weekly Reflection
Discuss the objectives for Weeks One and Two. Your discussion
should include the topics you feel comfortable with, any topics you
struggled with, and how the weekly topics relate to application in
your field.
Lucent Technologies

Lucent Technologies is a company based on networking for service
providers, government, and enterprises worldwide (Lucent
Technologies, n.d., Para 1). The products and services they work
with are separated into three categories; service and maintenance,
wireless mobility networking, and wire line networking. Lucent
Technologies is backed by Bell Labs, which does research and
development in networking technologies.
During the years of 2001 to 2003 this company has experienced a
decrease in demand because of other companies’ loss or capital
used toward spending. This is mainly due to a downturn in the
economy. As an investor this information is necessary to know
because it explains the decrease or increase in sections of the
balance sheet. In order to compare the growth or decline of the
company’s profit, an investor must change a balance sheet into a
common-size balance sheet. First when looking at the balance sheet
an investor will see that the amount of paid in capital has increased
from the year of 2003 to 2004, the assets have increased, but the
liabilities have decreased. When running a debt/asset ratio it is
noticed that this ratio drops from 1.2 in 2003 to 1.0 in 2004. This
shows the company’s risk is low when concerning financial
leverage, usually when the debt ratio is less than one percent it is
financed mainly by company equity, so this company is close to
being debt free from creditors.
After changing the balance sheet to a common-size balance sheet
there are several factors an investor will look at. The current assets
have dropped to .48 from .49 in 2004. This does not show harm to
the company because only the accounts receivable dropped while
the rest of the current assets increased. This means the company is
not in as much danger of default on money owed to it. It does have
a rise in marketable securities. The one concern in the assets is the

increase of prepaid cost of pensions and goodwill. Goodwill can be
used for tax breaks but prepaid pensions cannot benefit the
company.
When looking at the liabilities section an investor will see a drop in
pension and liabilities and an increase in long term debt, both of
these could be affected because of the drop in the economy. Long
term liabilities are often increased to help a company control
interest rate increases so as an investor cutting back on pension
liabilities cuts back cost to the company and watching interest rate
increase show the company is concerned with its earning and
investors. This would be encouraging or an investor. The
stockholders deficit shows a drop in accumulated deficits from -1.43
to -1.22 and total deficits of -.26 to -.08. This shows the company is
working to control any money loss and turning it to the company’s
advantage. Overall it shows the company is still earning a profit
although small. With an increase of assets and a drop in liabilities
the company is showing it is working in a low risk capital.
After reviewing this information, a creditor or investor must be able
to compare this company to the industry totals. By comparing how
this company compares to other companies similar to it, a person
can see if it is competitive and worth taking a risk. Running ratios
will also show if the company is capable of paying off any debts it
has or if it can acquire the needed cash in case of emergencies.
Overall as an investor, I would say this company would be worth
investing in.

Reference
Axia College. (2007). Understanding Financial Statements.
Retrieved May 10, 2010 from Axia College, Week 2 Assignment,
ACC/230.
-----------------------------------------------------
ACC 291 Week 2 Wileyplus Assignment P8-3A, BE9-11,
DI9-5, E9-7, E9-8, BYP9, P9-2A (New)
·P8-3A, BE9-11, DI9-5, E9-7, E9-8, BYP9, P9-2A.
 Problem 8-3A: Bosworth Company
 Brief Exercise 9-11: Nike, Inc.
 Do It! 9-5


 DifferentiatingDepreciationMethods

 There isone main difference betweenstraightline depreciationandaccelerated
depreciation.Straightline is decidedbytakingthe costof the assets,figuringoutthe salvage
cost whenthe use of the assetisfinishedandhow manyyearsof use the assethas. A person
thentakesthe cost minussalvage anddividesthe remainderbythe numberof yearsof use.
Thisamountis the depreciationexpense subtractedeachyearfromthe cost.The
accelerateddepreciationdoesnothave the same amountof deprecationsubtractedeach
year.It doeshave the cost minussalvage value tofigure outthe amounttouse but is then
dividedoutdifferently.A persontakesthe sumof the yearsof a product’suseful life,suchas
three yearsis3 + 2 + 1 = 6, thena personwoulddividethe depreciationamountby3/6 the
firstyear,2/6 the secondand finally1/6forthe final year.Sothe amountof depreciation
expense islargertosmallerwithacceleratedandequal amountsforstraightline.

 The advantagesof straightline methodare itis easierandfastertofigure.The advantage of
acceleratedmethodisitismore accurate whenfiguringdepreciationexpense.The
acceleratedmethodhasanadvantage anddisadvantage concerningtaxes.A companycan
use the acceleratedmethodtotake advantage of biggertax breaksat the beginningof an
assetslife,butsince thisamountdropsduringthe lifespanif the companyneedsaddedtax
breaksitwill notreceive themfromthese assetsinthe future.Withthe straightline method
the amountof tax breaksare eventhroughthe life of the product.Most companieschoose
thisformof depreciation forreportingpurpose ontaxesbutwill use the accelerated
methodtofigure taxable income.
 As mentionedbeforethe advantage of straightline depreciationisitiseasiertofigure and
usesthe same total each yearfor deductionof depreciationexpense butthe disadvantage is
that if use for taxable income andreportingacompanydoesnotgeta biggertax breakat
the beginningof the assetslife whentheyhave justputoutthe cost forthe itemandmay
needa biggertax break.


 -----------------------------------------------------
ACC 291 Week 3 Assignment The Liabilities Section of
O’Brian’s Balance Sheet
understand the balance sheet presentation for the liabilities of a
company. Assignment Steps Resources: Financial Accounting: Tools
for Business Decision Making Prepare the liabilities section of
O’Brian’s balance sheet using the following information: • Accounts
payable $157,000 •
Preparing an Income Statement

Coyote, Inc. Company
Multi-Step Income Statement
200x 201x 202x
Net Sales 1,833,000$
Cost of Goods Sold 1,072,000
Gross Profit 761,000 - -
Selling and Administrative Expenses 454,000
Advertising
Depreciation and Amortization 14,000
Repairs and Maintenance
Operating Profit 293,000 - -
Other Income (Expense)
Interest Income 13,000
Interest Expense (16,000)
Earnings Before Interest and Taxes 290,000 - -
Income Taxes 116,000
Net Earnings 174,000$ -$ -$
The companies’netincome isprofitable whenthe salesexceedthe costof goodssold.Inthis,the
gross profitis$761k. Thisis beneficial tothe company.Thoughwe tookthe cost of goodsaway from
the netsalesthere are still otherareaswhichneedtotake a piece of the pie.Forthiscompany,once
the SG&A and depreciationare takenout,the companystill containsaprofitof $290k. But the buck
doesnotstop there.Once the interestincome andinterestexpense are adjustedthe balance before
earningsand taxesis$290k. Aftertaxesare takenout,the companyis leftwithanetprofitof $174k.
In thiscase I thinkthe companyhas achievedsuccesswithanetprofitof $174k. If the company were
unable tobe profitable,the companywouldeventuallygooutof business.We wouldbe able totell
if the companywas not profitable bylookingateachsectionindividually.The costof goodssoldis
whatstands outfor me.If we paymore to make the productthenwe are actuallysellingitfor,there
isno profitto be made.So,I thinkit shouldall startthere.
-----------------------------------------------------

Why does a company choose to form as a corporation?
What are the steps required to become a corporation?
Week 3 DQ 1
Due Tuesday, Day 2
Post your answer to Problem 3.5 on p. 109 (Ch. 3). How might
the information contained within the stockholderequity
statement be used for management and investor decision-
making? Provide specific examples of situations in which the
stockholderequity information might be used.
The statement of stockholders’ equity provides the changes in the equity accounts during the
accounting period more in depth than the balance sheet. The information found on the
statement of stockholders’ equity includes retained earnings, common and preferred stock,
and additional paid in capital. Management uses the statement of stockholders’ equity to
ensure they are reaching their goal of maximizing shareholder's equity. The use of market
ratios help with the analysis of the statement of stockholders’ equity, such as earnings per
share, price-to-earnings, dividend payout, and dividend yield. These ratios will help both
management and investors in analyzing the company. For example, if I were looking to
invest in a company’s stocks I would utilize all of the financial ratios, as well as the market
ratios. The earnings per share ratio is calculated before the price to earnings ratio, P/E,
because the earnings per share ratio is used in the second. If a company pays dividends,
the dividend payout ratio will come in handy. It tells us “The percentage of earnings paid to
shareholders in dividends” (Investopedia, 2010, p. 1).
References
Investopedia. (2010). Dividend Payout Ratio. Retrieved August 3, 2010, from
Investopedia:http://www.investopedia.com/terms/d/dividendpayoutratio.asp

Response 2
Explainwhat can be found on a statementof stockholders’equity.
The majorelementsof stockholders'equityinclude capital stock,paid-incapital,retainedearnings,
treasurystock,unrealizedlossonlong-terminvestments,andforeigncurrencytranslationgainsand
losses.
How might the informationcontainedwithin the stockholderequity statementbe used for
managementand investordecision-making?Provide specificexamplesofsituationsinwhich the
stockholderequityinformationmight be used.
Managementmaylookat the stockholder’sequitystatementretainedearningssectiontodetermine
if companyshouldborrowmoneyforcapital investmentsorfinance itthroughvariousformsof
equity.Itmayalsobe usedbythe stockholdertoevaluate the compensationpaidtothe company
officers.Investorsmayalsolookatthe statementforcumulativenetunrealizedgainsandlosses
before purchasingstockinthe company.Investorsare alsointerestedinthe paidincapital because
theycan compare it to the additional paidincapital and the differencebetweenthe twovalueswill
equal the premiumpaidby investors overandabove the parvalue of the shares.
DQ 2
Week 3 DQ 2
Due Thursday, Day 4
Provide an example from the text or the Internet that
demonstrates a situation in which a company’s net profits
appeared good in the statements, but the gross or operating
profits presented a different picture. Discuss how this might have
occurred. Respond to the following question, addressed in
Problem 3.6 on p. 109 (Ch. 3): “Why is the bottom-line figure, net
income, not necessarily a good indicator of a firm’s financial
success?” Look for indicators like liquidity or solvency to answer
this discussion question.

An example that demonstrates the situation is Enron. Enron’s financial
statements did not show all the expenses and costs. Instead of showing them on
the income statement they made entries so the cost and expenses would post in
the balance sheet. The same was done with the revenues. This way it would be
less expenses and the net profit appeared good. Many debts and losses were not
reported in the financial statements. From the third quarter of 2000 through the
third quarter of 2001, the directors fraudulently used reserve accounts within
Enron Wholesale to mask the extent and volatility of its windfall trading profits,
particularly its profits from theCalifornia energy markets; avoid reporting large
losses in other areas of its business; and preserve the earnings for use in later
quarters. By early 2001, Enron Wholesale's undisclosed reserve accounts
contained over $1 billion in earnings. The head of the company improperly used
hundreds of millions of dollars of these reserves to ensure that analysts'
expectations were met. In addition, Skilling and others improperly used the
reserves to conceal hundreds of millions of dollars in losses within Enron's EES
business unit from the investing public.This would show the creditors that Enron
was making profits and its position was solid.
The net income is not necessarily a good indicator of a firm’s financial success
because the income statement only shows the profit or loss at a period of time
and does not show the whole picture of the company. The Balance Sheet,
Statement of cash flow,Statement of shareholders’ equity and the Income
Statement all together give the real picture of the business. Eachone of them
shows different aspects of the business. These statements show where the
income is actually coming from; is it from sales or from loans the company is
borrowing? If the company is selling a building or any other asset but that does
not mean that it is selling more products and making profit. Looking at the Income
Statements the company might be making profit but at the same time it is
extremely leveraged.
Response 2
A company’s net income is not the whole picture, just part of it. There are lots of things that
contribute to the net income that may not be significative to the company’s success. If the
value of a dollar has a sudden change that can affect the bottom line if the company
happens to hold the medium of exchange that can benefit by the change that might occur.

The company can falsely inflate the bottom line. A company’s net income is coupled with
liabilities, cash flow, and selects financial ratios. Looking at it this way is a much better way
of seeing what the company’s success is like. A company can change up many things to
make it look like their income is better. These things that can be changed are single sales
events, cash infusion, or false financial statements. Some things like debt that a company
has, the company’s cash on hand, their capital assets conditions, or even their sales trends.
To figure the success of the company, you must look at the whole picture. One thing cannot
tell you all the facts of the company’s affairs. You cannot tell the net income of the company
just from the bottom line. Look at all the financial records.
Response 3
Provide an example from the text or the Internet that demonstrates a situation in which a company’s
net profits appeared good in the statements, but the gross or operating profits presented a different
picture. Discuss how this might have occurred. Respond to the following question, addressed in
Problem 3.6 on p. 109 (Ch. 3): “Why is the bottom-line figure, net income, not necessarily a good
indicator of a firm’s financial success?” Look for indicators like liquidity or solvency to answer this
discussion question.
Net income is not necessarily a good indicator of a firm’s financial success
because they have ways to manipulate it by increasing their revenues or hiding
some of their expenses. For investors trying to decide where to invest their
money, they need to look more into assessing how the company came up with
the numbers they presented.
An example of this situation is when Laribee Wire Manufacturing Co. exaggerated
in recording their inventory value which allowed them in acquiring loans from six
banks totaling to about $130 million using it as collateral. At the same time, they
reported $3 million in net income for the period, but in actuality they lost $6.5
million.
This company showed a higher net income by reporting fake inventory in which
its value was overstated and transferred over to their income statement. When
the banks assessed their financial statements, it was enough to sway them into
lending the loans they needed.
Reference:
Investopedia. (2010). Spotting Creative Accounting On The Balance
Sheet. Retrieved

fromhttp://www.investopedia.com/search/searchresults.aspx?q=Spotting+Creative+Accounting+O
n+The+Balance+Sheet&submit=Search
-----------------------------------------------------
Why is preferred stock referred to as preferred?
What are some of the features added to preferred stock that make it
more attractive to investors?
STOCKDIVIDEND
Stock Split
University of Phoenix
Stock Dividend
In the presenttime,the stockdividendhasbecome importantconcept.Whendividendis
giveninformof stock,itis calledstockdividend.Inthisformof dividend,the cashdoesnotuse.It is
important,whenthe corporationdeclaresstockdividend,the marketvalueof the share decreases
because the numberof stockincreases.The manycompaniespreferstockdividenddue tothe tax
benefit.If the individual getsstockdividend,he doesnotpayanytax on stockdividend.Thusthe

stock dividendreducestax burden. Onthe otherhand,the ownershipof investorsalsospursupi n
the companybecause the numberof holdingshare increases.Thereisalsodisadvantageof stock
dividend.The marketvalueof the share decreases,sothe marketvalue of holdingalsodecreases
(Kennon, 2009).
The ABC Companyisleadingcompanyinits industry.The numberof outstandingshare of
the companyis one million.Onthe otherhand,the numberof investorsisfive millions.The valueof
marketcapitalizationis$100 million.The managementdeclares20% stock dividend.Thusthe
200000 shareswill be distributedasastock dividend. The numberof outstandingshare willbe
increasedby200000 and the newtotal numberof outstandingstockwill be 1.2million.Onthe other
hand,the newvalue pershare in the marketwill be $83.33 (100 million/1.2million).Thisexampleis
takenfrombelowmentionedlink:
Stock Split
The stock splitisalsoan importantconcept.Whenthe managementwantstoincreases
numberof shares,the managementfollowsthismethod.Inthismethod,the face value of the share
issplitand numberof share getsincreased.Due toincrementinnumberof outstandingshare,the
marketvalue of pershare alsogetsaffectedbutthe total marketcapitalizationof the companydoes
not affect.Bothstocksplitand stockdividendincrease numberof outstandingsharesbutbothare
differentdue tothe accountingtreatment.Inthe stocksplit,the investorsdonotgetany real
benefit. Itisalso knownasnon-cashdistributionof dividend. The mottobehindstocksplitisto
increase tradingof the sharesinthe market(Baker,2009)
For example,the face value of pershare is$100 and the total outstandingsharesare 100
million.If the managementof the companyannouncesstocksplitinratioof 1:2, the total
outstandingshareswill be increasedby100 million,thusthe new total numberof the share will be
200 million.Onthe otherhand,the face value of the share will reduce by50%. So the new face value

of the share will be $50. Due to effectof stocksplit,the holdingshare of the investorwill also
increase inthe prorate basis.If the investorhas10 shares,now he will have 20 shares.It isimportant
thingthat the total issuedcapital will notbe changed. The illustrationof stocksplithasbeengot
fromfollowinglink:
Reverse Stock Split
The reverse stocksplitisjustopposite of stocksplit.Inthisprocess,the management
reducesthe numberof outstandingshares.The companyincrease face valueof the share.Inthis
methodcorporationdecidesaratiosuchas 2:1. Thus the company accumulates twosharesinone
share.In thismethod,the total marketvalue of companydoesnotchange.Due to reverse stock
split,the earningpershare andface value of pershare rises.Thusthe reverse stocksplitprovides
justopposite resultfromstocksplit.Itisimportantquestion,whycompanyselectsthismethod.
Whenthe managementseemsthatthe face value of the share islessas comparedto competitors
thenthe companygoesfor thismethodtomake its share value toequal to competitor’sshare’sface
value.Itisalso a soundstrategyto increase treadingof shares.If the face value of share istoo cheap
incomparisonto competitors,the investorswill be discouragedforinvestment.Forincreasingthe
confidence of investors,the managementusesthismethod(Mladjenovic,2009).
For example,aninvestorholds100 sharesof XYZ Companyand the face value pershare is
$50. If the managementgoforreverse stocksplitoptionanddeclaresone share for10 sharesthen
the holdingof the individual will reduce 9sharesforevery10 shares.Thusthe new holdingof the
investorwill be 10(100/10) sharesbut the face value pershare will be $500. Itis alsoimportantthat
the total marketcapitalizationwillremainassame asbefore reverse split.The example of the
reverse splitistake formbelowmentionedlink: http://www.sec.gov/answers/reversesplit.htm.
References
Baker,H. K. (2009). Dividendsand Dividend Policy.JohnWileyandSons.

Kennon,J.(2009). All AboutDividends.RetrievedMay31, 2010, from
http://beginnersinvest.about.com/od/dividendsdrips1/a/aa040904_2.htm
Mladjenovic,P.(2009). Stock Investing forDummies.Dummies.
-----------------------------------------------------
ACC 291 Week 3 Individual WileyPLUS Assignment
we have another New set of week 3 Willeyplus assignment which
could be found on this link
Analyzing an Income Statement
The net income of Kodak has decreased a bit; it appears that the
company is more profitable. By conducting a side by side analysis
from 2004 to 2003 the company has increased in current assets and
decreased in total assets. It appears that the company went down in
property, plant and equipment net as well as discontinued
operations. So, despite the decrease in total assets it looks like the
company has made a good decision.

The company has also decreased its total liabilities by about 4%. I
believe this to be good because the short term borrowings and long
term debt has decreased. To me, this means that the company is
tightening their belt and paying off old debt.
Total shareholders’ equity has down a little bit in dollars, but on the
percentage level the company’s percentage has gone up. I believe
this is because the company issued $104k more shares in 2004 than
in 2003. The company has the same amount of shares outstanding
in 2004 that it did in 2003 as well. Retained earnings on the stock
have gone up in 2004 as well. I believe this is contributed by the
more shares that have been issued.
I believe the profitability of the company is under good standings.
They appear to be making the necessary adjustments in the
company to stay with in a profitable income.
-----------------------------------------------------
ACC 291 Week 3 Individual WileyPLUS Practice Quiz Ch.
11,12
Resource:WileyPLUS
Complete the WileyPLUS Week Three Practice Quizzes for chapters
11 and 12.

The cash flowstatementis importantfinancialstatementof the corporation.The cashflow
statementstatesfromwhere cashhascome andwhere cash hasbeengone.Thusthe cash flow
statementmakesarelationshipbetweenbeginningbalance andendingbalance of cash.The cash
flowstatementisprepaidonthe basisof income statementandbalance sheetof the company.The
Little BitInc’sbeginningcashbalance includingmarketable securitieswas$24000. On the other
hand,the endingcashbalance includingmarketable securitiesof the companywas$40000
(Weygandt,Kimmel &Kieso,2009).
The net income of the companywas $5500 during2009. The companygeneratedcashinflow
fromoperatingactivityislessascomparedcash outflow fromoperatingactivities.The company
generated$9000 negative cashbalance inoperatingactivitysectionof the cashflow statement. On
the otherhand,in the investmentsection,the firmhasalsonegativecashbalance.The firmhas
$7000 negative balance ininvestmentsectionof the cashflow statement.The Little BitIncmade
investmentduringthe yearinsteadof sellingof assets. Lastsectionof the cashflow statementis
financingactivitysection.Inwhich,all finance relatedactivitiescome.The corporationsoldsome
sharesand borrowedsome moneyfrom outsidelenderstherefore the companyhaspositivecase
balance by$32000 in financingactivitysection.

Reference
Weygandt,J.J.,Kimmel,P.D.&Kieso,D.E.(2009). ManagerialAccounting:ToolsforBusinessDecision
Making. JohnWileyandSons.
-----------------------------------------------------
ACC 291 Week 3 Learning Team Weekly Reflection
Discuss the objectives for Week Three. Your discussion should include
the topics you feel comfortable with, any topics you struggled with,
and how the weekly topics relate to application in your field.
Week 5 DQ 1
Due Tuesday, Day 2
In what ways does the statement of cash flows relate to the balance sheet and
income statement?
It is important to understand what we are doing with the numbers and the results
these numbers give us because the result is the information that will be available
to us from financial statements. Although some want to see the income
statement and ignore the other statements we need to use them together to see

the total picture of what is happening to our business. The relationship between
the numbers on the financial statements shows us everything we need to know
about the business.
The income statement shows income and expenses for a period of time and if we
are making or loosing money. The balance sheet compares the assets to liabilities
and shows how much money the business would have if everything is sold today.
The statement of cash flow might be the most critical statement because there is
plenty of information we can gain form it. This statement relates with the income
statement on operating activities to see if they are generating cash or not. It is
related to the balance sheet on how much cash is used in investing activities. In
relationship with the balance sheet the cash flow statement shows what cash is
provided or used by financing activities. It will tell us how much debt has been
paid and will indicated if we are using more debt or have paid down the credit
line.
When the business makes a sale or receives payment for a sale on credit that is an
inflow. A sale shows up as income on the profit and loss statement and as an
inflow on the cash flow statement. It also shows up either as cash or accounts
receivable on the balance sheet. Also, how quickly we cancollect on accounts
receivable will play a big role in the cash flow. When the business spends money,
it shows up as an expense in the profit and loss statement and as an outflow on
the cashflow statement. It also shows up on the balance sheet as a decrease in
cash, or an increase or decrease in liabilities, depending on what the expense
represents.
Response 2
In what ways does the statement of cash flows relate to the balance sheet and income statement?
The cash flowstatementrelatestothe income statementandbalance sheet.The netincome from
the income statementislistedonthe statementof cashflows. Operatingactivitiesare analyzedon
the statementof cash flows;thissection of the statementreconcilesthe netincome tothe actual
cash the companyreceivedfromorusedduringoperations.The secondsectionof the statementof
cash Flowsisthe cash flowfrominvestingactivitieswhichincludepurchase orsale of assets.The last
sectioninthe Statementof CashFlowsisthe cash flowsfromfinancingactivitiesthatincludesraising
cash by sellingstocks/bondsorborrowingfrombacks;or cash out flowsfrompayingbackloans. The
balance sheetshowsthe differentaccountbalancesatthe endof the accountingperiod.The
statementof cashflowsreflectschangesinthe accountslistedonthe balance sheetbetween
accountingperiods.The netcashfrom operating, financing,andinvestingactivitiesare addedupto
calculate the netchange in cash.

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