...ACCT504 Week 1 Objectives (JAN15) 1 of 2 https://devry.equella.ecollege.com/file/c3a70b64-5599-41cb-be31-a270... Print Given an annual report, the student should be able to read, understand, analyze, and explain a A company’s Balance Sheet to other decision makers and use the knowledge and skills to make business decisions. Key Concepts Understand the environment of financial reporting in the United States and explain the importance of generally accepted accounting principles. Explain the meaning and purpose of a balance sheet and the items that appear in the balance sheet. Determine the interrelationship among the basic financial statements. Analyze the relationship between certain items in the balance sheet and the income statement with the help of ratio analysis. Evaluate the way that different assets, liabilities, and stockholders' equity items are presented in a balance sheet. Given an annual report, the student should be able to read, understand, analyze, and explain a B company’s Income Statement to other decision makers and use the knowledge and skills to make business decisions. Key Concepts Explain the meaning and purpose of an income statement and the items that appear in the income statement. Determine the interrelationship among the basic financial statements. Analyze the relationship between certain items in the balance sheet and the income statement with the help of ratio analysis. Evaluate the way that different revenues, expenses...
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...Prepared for: Jon Adams – President of LJB Company Date: December 1, 2013 After meeting with Mr. Smith, the president of LJB Company, he has informed me of his decision to make the company a public entity. Before this process can happen, we must first review any new rules or regulations that apply to private companies going public. Good corporate governance within an organization could make a company more attractive to potential buyers, investors, and other capital sources. After reviewing the Sarbanes-Oxley Act 404 of 2002, all public traded US corporations are required to maintain an adequate system of internal controls. The field of internal controls comprises of an organization's structure, work and authority flows, people and management information systems which is designed to help the organization accomplish specific goals or objectives. If LJB Company decides to go public, the components of the Internal Control would be based upon the procedures of a controlled environment, risk assessment, control activities, information and communication and monitoring. LJB has had a great retention rate that allows us to identify on a business and personal level with the employees. The employees here at LJB, have shown consistent work ethic as they have also proven to have a shared investment with the company. Our controlled environment is tightly knitted together with the job duties delegated to individuals that matches their specific education and back ground. There was mention...
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...LBJ COMPANY COMPANY ADVISORY REPORT 2013 PREPARER: 11/27/2013 LBJ COMPANY COMPANY ADVISORY REPORT 2013 PREPARER: 11/27/2013 Table of Contents Introduction3 New Internal-control requirements3 Benefits of acquiring the control requirements5 Company’s positive attributes6 Indelible ink machine6 Present Internal-Control Violations7 Conclusion……………………………………………………………………………………………………………………………………………….8 Work Cited………………………………………………………………………………………………………………………………………………9 Introduction Within this Company Advisory Report I am presenting the different issues that need to be addressed before the company goes public. First, my report will present the internal control requirements that need to addressed, so all of the problems can be examined and adjusted before the company goes public. Secondly, I will present all of the positive attributes that your company has in place at the present time. Also, I will address the possible purchase of the indelible ink machine and the positive/negative effects that it can present to the company. Lastly, I will present the internal-control principles that have been violated & the improvements that need to be made before the LBJ Company goes public. New Internal-Control Requirements Some serious internal-control requirements that need to be addressed are presented before going public, so all of the potential problems can be adjusted and/or managed before following through with the public introduction. First, since the accountant...
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...Case Study 2 Situation a. In evaluating the internal control over cash payments of Yankee Manufacturing, an auditor learns that the purchasing agent is responsible for purchasing diamonds for use in the company’s manufacturing process, approving the invoices for payment, and signing the checks. No supervisor reviews the purchasing agent’s work. 1) Missing internal control characteristic: Segregation of duties 2) Possible problem: The employee who is approving invoices and signing the checks should not be allowed to purchase the diamonds. There may be possibility of doing fraud by stealing diamonds or cash. 3) Solution to the problem: Keep a supervisor to approve the purchasing order and another manager or supervisor to approve and sign the checks. This will guarantee that proper quality control as well as check and balances are taken into consideration. Situation b. Rachel Williams owns an architectural firm. Williams’ staff consists of 19 professional architects, and Williams manages the office. Often, Williams’ work requires her to travel to meet with clients. During the past six months, Williams has observed that when she returns from a business trip, the architecture jobs in the office have not progressed satisfactorily. Williams learns that when she is away, two of her senior architects take over office management and neglect their normal duties. One employee could manage the office. 1) Missing internal control characteristic: Supervision control 2)...
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...1. Question : (TCO A) A corporation has which of the following advantages? Student Answer: Reduced taxes Simple to set up CORRECT Limited liability for stockholders Owner maintains control Instructor Explanation: Chapter 1 Points Received: 5 of 5 Comments: Question 2. Question : (TCO A) Preferred stock _____. Student Answer: provides voting rights is an asset account is very common CORRECT provides preferred shareholders with a priority claim on assets versus common stockholders Instructor Explanation: Chapter 10 Points Received: 5 of 5 Comments: Question 3. Question : (TCOs A, B) Below is a partial list of account balances for LBJ Company: Cash $15,000 Prepaid insurance 1,000 Accounts receivable 3,500 Accounts payable 3,000 Notes payable 6,000 Common stock 100,000 Dividends 1,500 Revenues 75,000 Expenses 45,500 What did LBJ Company show as total credits? Student Answer: INCORRECT $185,500 $250,500 $66,000 CORRECT $184,000 Instructor Explanation: Chapter 2 and Chapter 3 Points Received: 0 of 5 Comments: Question 4. Question : (TCOs B, E) Which of the following statements is correct with regard to cash-basis accounting? Student Answer: Cash-basis accounting is required by GAAP. CORRECT Cash-basis accounting does not record any expenses until they are paid. Cash-basis...
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...LJB Company Internal Controls Evaluation and Assessment CONTENTS: 1. Introduction and Scope ……………………….Page 1 2. Results and Findings……………………………Page 2 3. Recommendations………………………………Page 3 4. Reference Citations………………………….…Page 4 LJB COMPANY - Internal Controls Evaluation and Assessment Introduction and Scope: This evaluation looks at the current internal control system at LBJ Company, assesses for compliance with requirements for Initial Public Offering (IPO) and provides recommendations for strengthening the primary components of an effective Internal Control System. Internal Control System Primary Components 1. A control environment: It is the responsibility of top management to make it clear that the organization values integrity and that unethical activity will not be tolerated. 2. Risk assessment: Companies must identify and analyze the various factors that create risk for the business and must determine how to manage these risks. 3. Control activities: To reduce the occurrence of fraud, management must design policies and procedures to address the specific risks faced by the company. 4. Information and communication: The internal control system must capture and communicate all pertinent information both down and up the organization, as well as communicate information to appropriate external parties. 5. Monitoring: Internal control systems must be monitored periodically for their adequacy. Significant deficiencies need to be reported...
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...1. (TCO A) Below you will find selected information (in millions) from Coca-Cola Co.’s 2012 Annual Report: Income Taxes Payable $471 Short-term Investments and Marketable Securities 8,109 Cash 8,442 Other non-current Liabilities 10,449 Common Stock 1,760 Receivables 4,812 Other Current Assets 2,973 Long-term Investments 10,448 Other Non-current Assets 3,585 Property, Plant and Equipment 23,486 Trademarks 6,527 Other Intangible Assets 20,810 Allowance for Doubtful Accounts 53 Accumulated Depreciation 9,010 Accounts Payable 8,680 Short Term Notes Payable 17,874 Prepaid Expenses 2,781 Other Current Liabilities 796 Long-Term Liabilities 14,736 Paid-in-Capital in Excess of Par Value 11,379 Retained Earnings 55,038 Inventories 3,264 Treasury Stock 35,009 Other information taken from the Annual Report: Sales Revenue for 2012 $48,017 Cost of Goods Sold for 2012 19,053 Net Income for 2012 9,019 Inventory Balance on 12/31/11 3,092 Net Accounts Receivable Balance on 12/31/11 4,920 Total Assets on 12/31/11 79,974 Equity Balance on 12/31/11 31,921 Required: 1. Using the information provided prepare a Balance Sheet. Separate the current assets from non-current assets and provide a total for each. Also separate the current liabilities from the non-current liabilities and provide a total for each. 2. Using the Balance Sheet from your answer above calculate; Current Ratio, Days in Inventory, Average Collection Period, Return on Assets Ratio...
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...Introduction LJB Company, a local distributor, is planning on going public in the future and has asked Lexary Accountants, Inc. to assist in this process by evaluating their system of internal control. The organization is committed to its customers and works to minimize waste by focusing all of its resources on producing the best possible value for customers, and being a lean organization, their investments are carefully considered and only made when it is clear that a long-term financial advantage exists in doing so. In going public, the President wants their organization's mission to remain in clear focus and wants to know the impact of any new regulations required for the company if they go public. With the promotion of the staff that is responsible for working on this evaluation at Lexary Accountants, Inc., I have been assigned to generate recommendations for my partner to share with the President of LJB Company. Lexary Accountant, Inc.’s Facts and Findings The organization has one accountant who serves as Treasurer and Controller who is also in charge of purchasing and paying for supplies. He receives checks, completes the monthly bank reconciliation, uses pre-numbered invoices and wants to buy an indelible ink machine to print checks. In addition to these responsibilities, he is responsible for picking up paychecks and safeguarding paychecks in a safe in his office. Both him and the President interviews and approves all new hires. Petty cash is easily available...
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...The ACCT504 Final Exam will be an online open-book, open-notes, open-computer exam with a time limit of three hours and 30 minutes. It will be worth 250 points or 25% of your course grade. The Final Exam is two pages long and will consist of 14 multiple-choice questions worth five points each and six essays worth 30 points. Some of the multiple-choice questions are problem-based. Of the six essays, five of the essays are problem-based since this is an Accounting course. Terminal Course Objectives A, B, C, D, E, F, and G are all addressed on this exam. You should review the following concepts for this exam. For the multiple choice questions worth a total of 70 points, you should know: 1. The characteristics of the corporate form of business. 2. About the term "cash dividend". 3. Which accounts have debit or credit balances. 4. The difference between cash-basis versus accrual-basis of accounting. 5. The meaning and implications of using FIFO, LIFO, and weighted average cost-flow assumptions. 6. How to calculate depreciation using the straight-line method. 7. The journal entry for the issuance of bonds (at par, discount, or premium) and for the issuance of stock (at par or above par). 8. How to determine the market value of a bond. 9. The various adjustments that are made to net income in arriving at net cash flow from operating activities. 10. The different tools of financial statement analysis, and how each tool is used, as well...
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...Week 1: Overview of Financial Statements - Discussion Accounting is a way of tracking transactions and organizing them into concise reports to be used by investors, principals of companies, or government agencies to be able to control the financial health of a company, family, or an individual. The book uses the example of a checkbook, which is apropos, as I don't know of anyone who has never "bounced" a check due to careless recording of a transaction. Accounting involves a level of trust, that the reporting is accurate and true. Unfortunately, trust is not enough, and it must be standardized and regulated. Accounting is a way to maximize a finite resource (capital) and allocate it in the most efficient way. Accounting is the bookkeeping methods involved in making a financial record of business transactions. It is also the preparation of statements concerning the assets, liabilities, and operating results of a business. Accounting is part of every day life for those who pay bills as well. Honestly in the business community there has to be accounting in place to see where the business stands. What is GAAP? What is the purpose of GAAP? | | | GAAP are the rules that stop accountants from manipulating numbers and formulas to represent whatever it is they want the numbers to say rather than it being an actual reflection of the company's performance. these principles are put in place to prevent the over valuation of company's and overstating of profits that...
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...Accounting 504 Case Study 2 Keller Graduate School of Management Prepared by: Purvi Patel Prepared for: Professor Ganesh 3 Oct, 2013 To: LJB Company President From: Purvi Patel, Accounting firm Subject: Evaluation of LJB Company’s Internal Control Structures Date: 3 April 2013 Hello LJB Company President: First, I would like to thank you for hiring my accounting firm to evaluate LJB’s internal controls system. This report will inform you of any new internal control requirements required for LJB to go public, advise you of what the company is doing right, recommend that LJB purchase an indelible ink machine and advise you what areas the company can improve. Introduction After observation LJB’s operations, I have determined LBJ needs to make changes regarding its internal controls system. All publically traded companies operations’ must comply with the Sarbanes-Oxley Act (SOX) accounting standards. As cited in by Kimmel (2011), complying with the internal controls practices set forth by the SOX act prevents fraud, encourage efficiency and effectiveness of operations, and insure a company is in compliance with applicable laws. The internal control standards outlined by the SOX act include a control environment, risk assessment control activities, information, communication and monitoring. NEW INTERNAL CONTROL REQUIREMENTS FOR GOING PUBLIC Sarbanes-Oxley Act of 2002 (SOX), enacted on July 29,2002, is a United States Federal law that imposed new rules...
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...LJB Company: Internal Controls. This proposal will inform the president of the new internal control requirements necessary if the LJB Company is to go public. This proposal will also inform the president of the already properly functioning internal controls, and the purposed purchase of the indelible ink machine. Finally, this proposal will inform the president as to the internal control measures which are not being taken, and thus inadequately protecting the company from becoming a victim of fraud. These topics will covered in order to exemplify what other internal controls are needed, where LJB Company is successfully implementing internal controls, and in what manner internal controls are lacking. One of the first internal controls LJB Company needs to implement is to have a system to separate the duties of the employees, and implement smart hiring practices (i.e. the accountant should not also function as the human resources representative, consequently a convicted child molester was hired). Second is the internal control of comparisons and compliance monitoring. No person or department should be able to completely process a transaction from beginning to end without being cross-checked by another person or department (i.e. the accountant purchases all the supplies and processed payment for these purchases, and he also receives and completes the bank reconciliations) (Harrison, Horngren & Thomas, 2013). Third, is to maintain adequate records, highlighting the importance...
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...LJB Company: Evaluation and Development of Internal Controls Accounting 504 Managerial Use and Analysis Professor Abner 8/10/2014 Evaluation of LJB Company’s current system of internal controls, with recommendations for improvements and an explanation of federal regulations required for the company to go public. Contents Introduction 2 Overview 2 Summary and Conclusion 3 Works Cited 4 Introduction The asked for appraisal of LJB Company's interior controls has been finished and our firm has likewise examined current regulations in regards to traded on an open market firms to help guarantee that your organization makes a smooth move into people in general business in the event that you choose to seek after this alternative. Traded on an open market enterprises are obliged to execute and take after the rules for inward controls and techniques for monetary reporting, put forward by the Sarbanes-Oxley Act (SOX) of 2002. This implies that upper administration and executives at LJB are in charge of guaranteeing that the controls are viable and solid, besides the organization should intermittently use outside examiners that will have the capacity to affirm the exactness of the interior controls. This data is recorded every financial year in the inside control report and will be incorporated as a feature of the yearly Exchange Act report. This demonstration serves to diminish the likelihood of corporate extortion by guaranteeing that all enterprises...
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...Dear Sir, Based on the information which was relayed to me I wanted to formally address your concerns with internal control and acceptable usage guidelines at LBC company. As I am sure you are well aware, your intension on taking the company public will demand very tight internal controls and the highest standards for your employees. I have prepared a few remarks, and suggestions which I recommend you implement before your company goes public. Internal controls comprises the enterprise of systems established in an organization to provide reasonable assurances that organizational objectives will be achieved. More specifically, internal controls objectives can be achieved based on the five following practices. 1. Ensuring the orderly and efficient conduct of business in respect of business standards and practices being in place and fully implemented. Controls means that clear guild-lines and standards are established and clearly understood by its employees. 2. Ensuring the completeness and accuracy of financial records. All financial transactions are fully and accurately recorded, assets and liabilities are correctly identified and properly valued, and that all revenues and costs are fully accounted for. 3. To prevent and detect fraudulent activity. Controls are necessary to show up any operational or financial disagreements that might be the result of theft or fraud. 4. Ensuring the timely and preparation of financial information which applies...
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...Part 2 of Case Study 3 in ACCT504 2. What are the three sections of a cash budget, and what is included in each section? The three major sections of a cash budget are cash receipts, cash disbursement, and financing. A cash receipt includes cash collections from customers; sales to customers, collecting on credit sales, interest made, etc. Cash disbursement is considered anything that is expected to be paid; administrative expenses, inventory purchases, taxes, etc. Financing is the part of the cash budget that is needed in case of a cash deficiency. If a cash budget falls short, the company can borrow money to make up for that amount. Repayment of the financing then also includes the interest that needs to be paid on that amount, (Weygandt, Kieso & Kimmel, 2002). 3. Why is a cash budget so vital to a company? A cash budget is a tool that can be used to manage a company’s cash. This budget will help a company stay focus by determining an appropriate budget, and help the company see if they can or cannot afford a new investment; or if and how much of financing may be needed. 4. What are the five basic principles of cash management that a company can follow in order to improve its chances of having adequate cash? The five principles are: Increase the speed of collection on receivables; which means that the company will be able to use those funds quicker. Next, inventory levels should be kept low, which also keeps the cost of storage lower and prevents from...
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