Devry ACCT 212 (Financial Accounting)
Introduction to Financial Statements – Discussion
Financial Statements (graded)
One key concept for week 1 is that financial statements are comprised of 4 statements: 1) Income Statement, 2) Balance Sheet, 3) Cash Flows Statement, and 4) Statement of Retained Earnings.
The Accounting System and Accrual Accounting – Discussion 1
Prepaid Expenses vs. Unearned Revenue (graded)
From this week’s reading, you were introduced to the concept of unearned revenue and prepaid expenses. Imagine that you are CFO of a company that manufacturers picture frames. Your company wants to become more vertically integrated, meaning it no longer wants to purchase the products that go into the frame, but rather manufacture them. To do this, your company has decided to acquire a glass manufacturing company. There are two glass manufacturers that your company is deciding between: Glass R’ US and Glass Team. In reviewing the balance sheet of each company, you noticed the following:
a. Glass R’ US has a large amount of Unearned Revenue and no Prepaid Expenses.
In your discussion post, explain what unearned revenue and prepaid expenses represent. Then, basing your decision solely on the amount of unearned revenue and prepaid expenses each company has, tell us which company you would acquire and why? (In answering “why”, be sure to include why you believe that company’s position is superior. For example, “I believe having a large amount of prepaid expenses is a better position because ….”)
Week 2: The Accounting System and Accrual Accounting – Discussion 2
Week 4: Inventory Management – Discussion 1
Inventory Management (graded)
A review of the balance sheet of a retailer, such as Wal-Mart, will disclose that in current assets the majority investment is in inventory. With manufacturers, such as Ford, the inventory is spread between three different categories. Let’s start our discussion with some basic inventory questions. How is inventory valued? Which inventory valuation method is most popular and why? What impact on the financial reports can the selection of an inventory valuation method have?
Week 4: Inventory Management – Discussion 2
Under US GAAP, management has choices about how to value current inventory and also the cost of goods sold. For example, they can choose LIFO or FIFO to value their inventory.) However, under International Financial Reporting Standards (IFRS), LIFO is not an option. To be in compliance with IFRS, international companies cannot use LIFO. Therefore, the majority of companies use FIFO to value their inventory and thus calculate cost of goods.
Week 5: Plant Assets and Liabilities – Discussion 1
Week 5: Plant Assets and Liabilities – Discussion 2
Week 6: Stockholders Equity and the Statement of Cash Flows – Discussion 1
Stockholders Equity (graded)
There are two basic classes of stock that exist: common stock and preferred stock. Since more than one class of stock is available to investors, an investor must determine which class of stock they would prefer to invest in. Additionally, a company must decide which class of stock they would like to issue.
In this discussion post, discuss the following: What are the advantages and disadvantages of each? Imagine that you created a newly formed entity. Would you issue common stock, preferred stock, or both? Why?
Week 6: Stockholders Equity and the Statement of Cash Flows – Discussion 2
Net Income vs. Net Operating Cash (graded)
Net Income and Net Operating Cash Flows are both important indicators of the health of a company. But why are they different? What do they have in common, and what makes them so important? Is there a relationship with the other sections of the cash flow statement? From an investors perspective, what are those relationships.
Week 7: Financial Statement Analysis – Discussion
Financial Statement Analysis (graded)
If you were to get a physical from your Doctor and they only took your blood pressure prior to stating that you are in good health, would you be concerned? If you have noticed in your readings starting in Chapter 3 that there has been explanation of the methods by which you could determine the financial health of a company. Name one and explain how it is computed? Which financial statement(s) does the input come from? Most importantly, what does it tell you about the financial performance or health?