Module 1 discussion

What year did the FASB take on the responsibility of
developing generally accepted accounting principles (GAAP)? Which body accepted
the primary responsibility for the development of GAAP prior to the FASB? Do
you believe the FASB should continue to be the organization primarily
responsible for the development of GAAP? Why or why not?

Module 2 discussion

The balance sheet, also known as the statement of position,
shows a company’s financial position at a point in time. Included on the
balance sheet are various assets that are reported at an estimated value.
Discuss the importance of the balance sheet to stakeholders, including, but not
limited to, investors, creditors, and governmental entities. With the core
value of integrity in mind, explain why it is important that management ensure
the reliability of the estimates used by accountants and the information
provided on the balance sheet.

Module 3 discussion

An income statement is a summary of revenues and expenses
and gains and losses, ending with net income for a specific period of time.
Indicate the two traditional formats for presenting the income statement. Which
of these formats is preferable for analysis? Why?

Module 4 discussion

Ratio analysis is quantitative analysis of information
contained in a company’s financial statements. Common-size analysis converts
each line of financial statement data to an easily comparable amount measured
as a percent. Both ratio analysis and common size analysis are important tools
used to analyze the financial results of corporations. Explain the importance
of both types of analysis. In your explanation, it is imperative you provide
examples of ratios with their measurement. Do you believe ratio analysis is
better than common size analysis or vice versa? Why or why not?

Module 5 discussion

Companies carry various types of long-term assets on their
books. These may include property, plant and equipment, investments in bonds,
investments in stocks, patents, and goodwill, to name a few.

Is it feasible for managers to get a precise measurement of
the funds that could be available from long-term assets to pay long-term debts?

Locate the annual report (10K) of a publicly traded company.
Discuss the types of long-term assets on the books that could potentially be
used to pay off the long-term debts. Is this company in a position to pay off
all their long-term debts with their long-term assets?

Module 6 discussion

Profits might be compared with assets, sales, and
stockholders’ equity. Why might all three bases be used? Will trends in these
ratios always move in the same direction? Why?

Compute the ratios for an actual company. Did the ratios
move in the same direction from one year to the next?

Module 7 discussion

A member of the board of directors is puzzled by the fact
that the firm has had a very profitable year but does not have enough cash to
pay its bills on time. Explain to the director how a firm can be profitable,
yet not have enough cash to pay its bills and dividends.

Module 8 discussion

Financial ratios are used extensively to analyze, interpret,
and explain the information provided in financial statements.

Why do you believe this is so?

Who are some of the stakeholders interested in financial
ratios and analyses?

Calculate 3 or 4 financial ratios of an actual company. Show
how you calculated these ratios, describe the meaning of the ratios you
selected, and discuss why you chose to calculate these ratios.

ACC 549 Financial
Statement Analysis Project Guidelines

This project consists of six parts. You are to act as a
financial advisor to a client interested in

investing in a particular industry. You will research two
separate companies in the same industry and

provide a recommendation to your client which company, if
any, he/she should invest in. One of the

companies should be a U.S. public company (10-K Annual
Report), the other company should be a

foreign company listed on a U.S. exchange (20-F Annual
Report). Good examples: Ford and Toyota.

Part 1: Selection of
companies

Submit the names of your two public companies to the
instructor for approval. Identify the industry

they are in. Make sure one is a US Company and one is a
Foreign Company listed on a US

Exchange.

Submit to the Dropbox no later than Sunday 11:59 PM EST/EDT
of Module 1.

Part 2: Obtain
Financial Statements from SEC.GOV

Obtain six years of financial statements for your company
from SEC.gov. Do not use other sources

(Yahoo Finance or the Company Website) to obtain this
information.

Resources: SEC Edgar Database at sec.gov

1. Go to www.sec.gov

2. Search for Company Filings

3. Enter Company Name, example (Nike Inc.)

4. For the Annual Report select 10-K (or 20-F)

5. Select documents

6. Select form 10-K (or 20-F)

7. This is the entire annual report, you only need the
financial statements

Submit to the Dropbox no later than Sunday 11:59 PM EST/EDT
of Module 2.

Part 3: Enter data
into the FSAP (Financial Statement Analysis Package) Excel File Enter the

Balance Sheet and Income Statement amounts for 5 years into
the Financial Statement Analysis

Package Excel file on the Data Tab of the FSAP.

Resource: FSAP Excel file.

Submit to the Dropbox no later than Sunday 11:59 PM EST/EDT
of Module 3.

Part 4: Company
Analysis

Write a brief description of the primary business activities
for your assigned companies. Focus more

on their position within the industry, recent developments,
fluctuation in stock prices relative to the

market/industry, and other items of significance that would
impact your investment decision. Do not

focus on the history and background of the company, but
rather on information that would be

relevant to decision makers.

The paper should be 2-3 pages, 12 pt. font, single spaced.

Resources: Annual Report (management discussion and
analysis), Company website, trade

journals.

Submit to the Dropbox no later than Sunday 11:59 PM EST/EDT
of Module 4.

Part 5: Industry
Analysis

Summarize the economic outlook for your industry. Look at
recent market activity, recent indicators

impacting your industry. Address recent change in stock
prices. Obtain industry averages for your

ratio, vertical, and common size analysis (see the Analysis
tab of the FSAP). Consider other expert

buy/sell/hold opinions.

The paper should be 1-2 pages, 12pt. font, single spaced.

Resources: Standard and Poor’s Stock Reports or other
Industry Surveys, Mergent’s Industry

Review, Finance.yahoo.com, moneycentral, msn.com,
hoovers.com, other financial websites, annual

reports, and trade journals. Examine recommendations of
other investment websites (buy/sell/hold).

Incorporate peer reviewed academic research articles into
your analysis. Analysis tab of the FSAP

Excel file.

Submit to the Dropbox no later than Sunday 11:59 PM EST/EDT
of Module 5.

Part 6: FINAL PAPER

1. Include Company Analysis (address prior comments): 2-3
pages

2. Include Industry Analysis (address prior comments): 1-2
pages

3. Include FSAP summary – Summarize the Analysis Tab of the
FSAP which contains Ratios,

Horizontal Analysis, and Common Size Analysis. Summarize the
information in a

professional and organized manor. Do not just cut and paste
the information into your paper.

4. Write a summary of the significant findings from the
financial statement analysis. This should

be 2-3 single-spaced pages, using 12-point font. Address the
Company & Industry analysis.

Address significant Ratios, Horizontal Analysis, and Common
Sized Analysis from the FSAP

(look under the Analysis Tab). Do not address all the ratios
and every line of vertical and

horizontal analysis, just what you feel is important and
significant to your decision. Focus on

the specific items that stood out and impacted your
decision. Include academic research to

support your analysis.

5. Based on your findings, which company, if any, would you
invest in? Include specific support

for your decision based on your findings in the analysis.
Also include support (for or against)

investing in the industry you chose. Include academic
research to support your final decision.

This should be one page, 12-point font, single-spaced.

Resources: Textbook and Academic peer-reviewed journal
articles.

The Final Paper should be 6-9 single-spaced pages plus
tables.

Submit the Project Part 6: Final Paper to Chalk and Wire no
later than Sunday 11:59 EST/EDT of

Module 8. The Project Part 6: Final Paper Chalk and Wire
link is located in the Module 8 folder.

Students who do not submit the assignment to Chalk and Wire
will receive a zero. This is a key

program assessment; the results are used to ensure students
are meeting program goals. Video and

PDF instructions can be found on the course home page. PDF
instructions are also located in the Start Here folder

ACC549_Assignments by Teaching
Faculty

1

Week Case Number

1

Case 1- 1, page 32

Case
2-2, page 83

2

Case 3 – 1, page 139

Case
3- 3, page 145

3

Case 4 – 4 page 193

Case 4- 5 page 193

5

Case 5- 4 page
222 (Use the 10-K for 2016)

Case 6-1 page 263

Case 7-2 page 311

6

Case 7-11 page 320

Case 8-3 page 354

7

Case 9-1 page 383

Case 10-1 page 423

Case 10-2 page 424

Midterm exam

Question 1 Listed below are several qualitative
characteristics. Label the characteristic (or characteristics) that align with
each statement.

a. Understandability

b. Usefulness for decision making

c. Relevance

d. Reliability

e. Predictive

f. Feedback value

g. Timely

h. Verifiable

i. Representational faithfulness

j. Neutrality

k. Comparability

l. Materiality

m. Benefits of information should exceed its cost

___ 1. Two constraints included in the hierarchy.

___ 2. For this quality, the information needs to have
predictive and feedback value and be timely.

___ 3. These are the qualitative characteristics that are
viewed as having the most importance.

___ 4. SFAC No. 2 indicates that to be reliable, the
information needs to have these characteristics.

___ 5. Interacts with relevance and reliability to
contribute to the usefulness of information.

___ 6. Two primary qualities that make accounting
information useful for decision making.

___ 7. For this quality, the information must be verifiable,
subject to representational faithfulness, and neutral.

___ 8. SFAC No. 2 indicates that to be relevant, the
information needs to have these characteristics.

Question 2 Listed below is information related to several
adjusting entry situations. Assume that the accounting year ends on December
31.

a. $3,000 paid for
insurance on October 1 for a one-year period (October 1 – September 30). This
transaction was recorded as a debit to prepaid insurance ($3,000) and a credit
to cash ($3,000).

b. Interest on
bonds payable in the amount of $500 has not been recorded at December 31.

c. Rent expense in
the amount of $1,200 was paid on November 1. This transaction was recorded as a
debit to rent expense ($1,200) and a credit to cash ($1,200). This rent payment
was for the period November 1 to January 31.

Record the original entries and the adjusting entries using
T-accounts

Question 3 A partial list of accounts for Johnson and Clark,
in alphabetical order, is presented below:

Accounts Payable

Interest Receivable

Accounts Receivable

Inventory¾Ending Balance

Accrued Salaries Payable

Land

Accumulated Depreciation¾Buildings

Land Held for Future Plant Site

Accumulated Depreciation¾Equipment

Loss on Sale of Equipment

Additional Paid-In Capital¾Common Stock

Marketable Securities

Allowance for Doubtful Accounts

Noncontrolling Interest

Bank Loan (long-term)

Notes Payable (long-term)

Bonds Payable

Obligations on Long-Term Loans

Buildings

Patent

Cash in Bank

Preferred Stock

Commission Expense

Premium on Bonds Payable

Common Stock

Prepaid Expenses

Current Portion of Long-Term Debt

Purchases

Equipment

Retained Earnings

FICA Taxes Payable

Sales

Franchise

Sales Salaries Expense

Goodwill

Treasury Stock

Interest Income

Unearned Rent Revenue

Prepare a consolidated balance sheet in good format, without
monetary amounts, for December 31, 2012. Use the format Current Assets;
Property, Plant, and Equipment; Investments; Intangibles; Current Liabilities;
Long-Term Liabilities; and Stockholders’ Equity. Do not use the accounts not
found on the balance sheet.

Question 4 The following is a partial listing of accounts
for Euisara, Inc., for the year ended December 31, 2012.

Prepare a balance sheet in good format for December 31,
2012.

Finished Goods

$ 9,718

Current Maturities of Long-Term Debt

1,257

Accumulated Depreciation

9,980

Accounts Receivable

24,190

Sales Revenue

127,260

Treasury Stock

251

Prepaid Expenses

2,199

Deferred Taxes (long-term liability)

8,506

Interest Expense

2,410

Allowance for Doubtful Accounts

915

Retained Earnings

18,951

Raw Materials

9,576

Accounts Payable

19,021

Cash and Cash Equivalents

8,527

Sales Salaries Expense

872

Cost of Goods Sold

82,471

Investment in Unconsolidated Subsidiaries

3,559

Income Taxes Payable

8,356

Work In Process

1,984

Additional Paid-In Capital

9,614

Equipment

41,905

Long-Term Debt

15,258

Rent Income

2,468

Common Stock

3,895

Notes Payable (short-term)

6,156

Income Tax Expense

2,461

Question 5 The income statement for Lifeline Products in
single-step format follows.

Lifeline Products

Income Statement

For the Year Ended December 31, 2012

Revenues:

Sales

$3,000,000

Rent Income

14,000

$3,014,000

Costs and Expenses:

Cost of Sales

2,370,000

Selling and
Administrative Expenses

322,000

Interest Expense

48,000

Loss on the Sale of
Plant Assets

16,000

$2,756,000

Income Before Taxes

$ 258,000

Income Taxes

112,000

Net Income

$ 146,000

Earnings per Share

$ 7.30

a. Convert the statement to multiple-step
format.

b. Recompute net
income with the unusual loss removed.

c. Why may net
income with the unusual loss removed be preferable to use for trend analysis?

d. Speculate on why
this loss is not considered extraordinary or as a disposal of a segment.

Question 6 Comparative income statements for 2012 and 2011
follow.

2012

2011

Sales

$9,434,000

$7,862,000

Cost of Sales

7,075,400

5,660,640

Gross Profit

$2,358,600

$2,201,360

Operating Expenses

1,367,690

1,365,060

Operating Income

$ 990,910

$ 836,300

Interest Expense

157,500

126,000

Earnings Before Tax

$ 833,410

$ 710,300

Income Taxes

400,000

317,200

Net Income

$ 433,410

$ 393,100

a. Prepare a
vertical common-size analysis of this statement for each year, using sales as
the base.

b. Comment briefly
on the changes between the two years, based on the vertical common-size
statement.

Question 7 Bill’s Produce does 60 percent of its business
during June, July, and August.

For Year Ended

For Year Ended

December 31, 2012

July 31, 2012

Net Sales

$700,000

$690,000

Receivables, less allowance for doubtful accounts:

Beginning of period

45,000

80,000

(allowance, January
1, $2,000; August 1, $3,000)

End of period

(allowance,
December 31, $3,000;

50,000

85,000

July 31, $3,500)

a. Compute the
days’ sales in receivables for July 31, 2012, and December 31, 2012, based on
the data above.

b. Compute the
accounts receivable turnover for the period ended July 31, 2012, and December
31, 2012.

c. Comment on the
results from (a) and (b).

Final exam

Question 1 (1 point) Question 1 Unsaved

The following information is computed from Fast Food Chain’s
annual report for 2012.

2012

2011

Current assets

$ 2,731,020

$ 2,364,916

Property and equipment, net

10,960,286

8,516,833

Intangible assets, at cost less applicable

amortization

294,775

255,919

$13,986,081

$11,137,668

Current liabilities

$ 3,168,123

$ 2,210,735

Deferred federal income taxes

160,000

26,000

Mortgage note payable

456,000

Stockholders’ equity

10,201,958

8,900,933

$13,986,081

$11,137,668

Net sales

$33,410,599

$25,804,285

Cost of goods sold

(30,168,715)

(23,159,745)

Selling and administrative expense

(2,000,000)

(1,500,000)

Interest expense

(216,936)

(39,456)

Income tax expense

(400,000)

(300,000)

Net income

$ 624,948

$ 805,084

Note: One-third of the operating lease rental charge was
$100,000 in 2012 and $50,000 in 2011. Capitalized interest totaled $30,000 in
2012 and $20,000 in 2011.

a.

Based on the above data for both years, compute:

1.

Times interest earned

2.

Fixed charge coverage

3.

Debt ratio

4.

Debt/equity ratio

5.

Debt to tangible net worth

b.

Comment on the firm’s long-term borrowing ability based on
the analysis.

Question 1 options:

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Question 2 (1 point) Question 2 Unsaved

Company P had the following capital structure at year-end
after closing.

6% Bonds

$10,000,000

3% Preferred Stock

20,000,000

Common Stock ($10 par)

10,000,000

Paid-In Capital in Excess of Par

15,000,000

Retained Earnings

35,000,000

a.

The return on common equity was 9%. Determine the net income
assuming common stock dividends were declared and paid.

b.

Using your answer in (a), compute return on investment.
Assume that the bond interest is the only interest expense and the tax rate is
50%. Use year-end balance sheet figures.

c.

Compute basic earnings per share. Assume the same number of
common shares throughout the whole year.

d.

Compute book value per share.

e.

If the market value is $78, compute the price/earnings ratio
using your answer to (c).

f.

Would you expect the market price to be higher than the book
value per share?

Question 2 options:

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Question 3 (1 point) Question 3 Unsaved

The following statements are presented for Melvin Company.

Melvin Company

Balance Sheet

December 31, 2012, and 2011

Assets

2012

2011

Cash

$ 625

$ 499

Marketable securities

260

370

Trade accounts receivable, less allowances of 36 in 2012

and 18 in 2011

1,080

820

Inventories, FIFO

930

870

Prepaid expenses

230

220

Total current
assets

$3,125

$2,779

Investments

$ 820

$ 600

Property, plant, and equipment:

Land

$ 130

$ 127

Buildings and
improvements

760

670

Machinery and
equipment

2,100

1,400

$2,990

$2,197

Less allowances for
depreciation

1,100

890

$1,890

$1,307

Goodwill

500

550

Total assets

$6,335

$5,236

Liabilities and Shareholders’ Equity

Accounts payable

$1,200

$ 900

Accrued payroll

100

80

Accrued taxes

300

200

Total current
liabilities

$1,600

$1,180

Long-term debt

900

750

Deferred income taxes

300

280

Shareholders’ equity:

Common stock

1,000

1,000

Retained earnings

2,535

2,026

Total liabilities and shareholders’ equity

>

Question 3 options:

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Question 4 (1 point) Question 4 Unsaved

ABC Company has been a wholesale distributor of automobile
parts for domestic automakers for 20 years.
ABC has suffered through the recent slump in the domestic auto industry,
and its performance has not rebounded to the levels of the industry as a
whole. ABC’s single-step income
statement for the year ended November 30, 2011 follows:

ABC Company

Income Statement

For the Year Ended November 30, 2011 (thousands omitted)

Net sales
$8,400

Expenses:

Cost of
goods sold 6,300

Selling
expense
780

Administrative expense 900

Interest
expense
140

Total
8,120

Income before income taxes 280

Income taxes
112

Net income
$ 168

ABC’s return on sales before interest and taxes was 5% in
fiscal year 2011 compared with the industry average of 9%. ABC’s turnover of
average assets of four times per year and return on average assets before
interest and taxes of 20% are both well below the industry average.

Joe Kuhn, president of ABC, wishes to improve these ratios
and raise them nearer to the industry averages.
He established the following goals for ABC Company for fiscal year 2012:

Return on
sales before interest and taxes 8%

Turnover of
average assets
5 times per year

Return on
average assets before interest and taxes
30%

For fiscal 2012, Kuhn and the rest of ABC’s management team
are considering the following actions, which they expect will improve
profitability and result in a 5% increase in unit sales:

1. Increase selling price 10%.

2. Increase advertising by $420,000 and hold all other
selling and administrative expenses at

fiscal 2011
levels.

3. Improve customer service by increasing average current
assets (inventory and accounts

receivable) by a
total of $300,000, and hold all other assets at fiscal 2011 levels.

4. Finance the additional assets at an annual interest rate
of 10% and hold all other interest

expense at fiscal
2011 levels.

5. Improve the quality of products carried; this will
increase the units of goods sold by 4%.

6. ABC’s 2012 effective income tax rate is expected to be
40% – the same as in fiscal 2011.

a. Prepare a single-step pro forma income statement for ABC
Company for the year ended

November 30,2012,
assuming that ABC’s planned actions would be carried out and that the

5% increase in
unit sales would be realized.

b. Calculate the following ratios for ABC Company for the
2011-2012 fiscal year and state

whether Kuhn’s
goal would be achieved:

1. Return on sales before interest and taxes.

2. Turnover of average assets.

3. Return on average assets before interest and taxes.

4. Would it be possible for ABC Company to achieve the first
two of Kuhn’s goals without

achieving his
third goal of 30% return on average assets before interest and taxes? Explain

your answer.

Question 4 options: