... | | |School of Business | | |ACC/230 (11/05/2012 – 01/20/2013) | | |Financial Reporting: Peeking Under the Financial Hood | Copyright © 2009, 2007 by University of Phoenix. All rights reserved. Course Description In this course, students will learn to analyze financial statements and methods used to value companies. Financial reports help managers choose between business paths. They also help investors and analysts evaluate the financial health of companies. This course is a practical means of discovering how financial data are generated and their limitations; techniques for analyzing the flow of business funds; and methods for selecting and interpreting financial ratios. It also presents analytical tools for predicting and testing assumptions about a firm’s performance. Policies Faculty and students/learners will be held responsible for understanding and adhering to all policies contained within the following two documents: • University policies: You must be logged into the student website to view this document. • Instructor policies: This document is posted in the Course Materials...
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...University of Minnesota Carlson School of Management Spring 2014 ACCT 2050 - Introduction to Financial Accounting Professor Yu Gao CSOM 3-283 Tel: 612-624-1075 Email: gaoxx112@umn.edu Class: Section 003: Tuesday, Thursday: 11:50 am-01:30 pm, CSOM L-114 Section 006: Tuesday, Thursday: 03:45 pm-05:25 pm, CSOM L-110 Office Hour: Tuesday, Thursday: 3:00 pm – 3:40 pm, CSOM 3-283 or by appointment COURSE DESCRIPTION The course provides an introduction to the financial accounting and reporting process from the perspective of external decision makers. The course focuses on fundamental accounting concepts and principles. Students will learn how the economic transactions of an enterprise are reported in the financial statements and related disclosures. The goals of the course are to provide students with a basic set of skills that can be used to compile and analyze financial statements and to prepare students for more advanced financial statement analysis courses. COURSE MATERIALS |Text Book |Financial Accounting 7th edition; Robert Libby, Patricia Libby and Robert Short; McGraw-Hill Irwin;| |(Required) |2010. | | |Connect Access Code | I do not recommend old editions of this book, but you make the final decision. You are required...
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...drastically impacts the position of an accountant. The information required by a company to make decision to make sure it is moving forward is provided by accounting. Both managerial and financial accounting plays a big role by working along to ensure the growth of the organization is in the right path. However, both managerial and financial accounting has its own purpose of improving an organization or a business. “Earlier financial accounting experiments typically sought to determine whether specific accounting policy choices would affect investors’ decisions.” (Pg778-experimental research) (122words) Role of Financial Accounting Every organization or business should be able to know their monetary progress or else they would never be able to evaluate if the business is profitable or the other way around. “The purpose of financial accounting is to provide users of financial statements with information that is useful for efficient decision making.”(accounting for intangible-pg102).It prepares the answers to financial accountants whom are always asked by investors on how the organization or business is growing. Financial accounting reports the financial activities on the balance sheet and income of the company and cash flow statement. It is one of the limbs in accountancy to prepare financial statements for external decision makers who are implicated in the investment of the business...
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...must always be more than the cost of capital, risk investment should be least. It is also needed in expanding a business. Today’s Managers need to be more commercially aware more so than ever before. Even if they do not have to manage budgets or finances themselves as part of their role they still need to understand about the financials of a company, what it all means and impact of their actions on the bottom line. If one plans the financial side of a business accurately he/she will be able to track the progress of their business in terms of profit and cash surpluses. Accurate financial documents will allow them to keep track of their cash flow and monitor how much of their loans have been paid off. They can measure their success through accurate financial planning. Financial documents will help them in keeping the records as- when company has retained enough profits to expand and improve its business. Improving business performance requires an understanding of the components of profit and value. So as to analyze financial information, that will provide managers and business owners with effective financial skills to enable them to improve the financial performance of their business. Conclusion: Finance for Non-Finance Managers is required: To have a general understanding of business finance which will enable them to improve the profits and value of their business,...
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...Managerial Accounting, also known as Cost Accounting, is defined as: “A branch of accounting that observes and calculates the actual costs of a company’s operations. It is the process of identifying, measuring, analyzing, interpreting, and communicating information in the pursuit of a company’s business goals. “ Farlex Financial Dictionary. (2012). Retrieved from: financial-dictionary.thefreedictionary.com/Managerial+Accounting Managerial accountants provide information to managers within a company. The managers then use the information to make decisions, prepare external reports, and budgets. They make decisions by analyzing the statements to evaluate performance and control costs in the most efficient way possible to meet the company’s goal. Managerial accountants must have a bachelor’s degree, in some places a master’s degree, and in some states be a CPA. Once a person becomes a managerial accountant they can work in an office or from home depending on the employer. With the rise in globalization, the need for managerial accountants familiar with international finance is also on the rise. Managerial accounting should not be confused with financial accounting as there are many differences between the two, outlined in the following table: Financial Accounting Managerial Accounting Must be accurate and timely Usually approximate but relevant & flexible Is compulsory under company law Except for few industries, it is not mandatory Provides data for external...
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...historical reference by defining procedures for retention, protection, retrieval, transfer, and disposal of records after its expiration period. • Maintains office efficiency by planning and implementing office systems, layouts, and procurement of equipments. • Designs and implements office policies by establishing standards and procedures; measuring results against standards; making necessary adjustments. • Completes various tasks based on the requirements and follow up on work results. • Keep management informed by reviewing and analyzing special reports; summarizing information; identifying trends. • Maintains professional and technical knowledge by attending educational workshops on the web; reviewing professional publications; establishing networks; participating in professional societies. • Achieves financial objectives by preparing an annual budget; scheduling expenditures; analyzing variances; initiating corrective actions. • Contribute effort to accomplish related results as needed. • Renewal of Tenancy Contracts – Employee Residence, by having accurate information and proper documentation. • Arrange insurance for their accommodation being MPAM’s assets and renew the same on time. • Set up Insurance for the Office Premises, Assets, and Fidelity Guarantees. • Negotiate with the suppliers to get a competitive Pricing for all services required by the company...
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...Although the FASB Disclosure Framework provides various advantages, there may be other relevant challenges placed on the financial reporting preparers. As stated in proposed ASUs on Topics 235 and 740, reporting entities need not disclose immaterial item. This adjustment to omit immaterial disclosure may result in a lower entity’s total reporting cost and it is beneficial to the public to see those relevant data. Additional costs, however, may also incur during the information materiality assessment process. That is, a reporting entity should consider and examine both qualitative and quantitative information when deciding information materiality (FASB 2015 and FASB 2016). Therefore, this assessment cost is unavoidable when identifying whether...
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...The Purposes and Components of Balance Sheet and Income Statement. An income statement of an organization shows its revenues and expenses during a particular period. It indicates how revenues are converted into net income. It shows revenues documented for a precise period, and the cost, taxes as well as the expenses that were charged (Helfert, 2001). The purpose of the income statement is to tell managers and investors if an organization made profit or not during the period that is being reported. Income statement represents a period of time whiles balance sheet shows the same information but at a single moment in time (Gapenski, 2012). Challenges that Might be Encountered in Interpreting Financial Statements There are certain problems and issues that might be encountered in analyzing financial statements which demand care and Verdict. The basic problem in financial statement is that there is no theory which tells us which numbers we need to look at and how to interpret them. In the absence of a fundamental theory, financial statement analysis appears to be informal and subjective. Again many organizations, particularly the big ones, have set-ups spanning a varied range of industries. This makes it very difficult in trying to find suitable standards for evaluating financial performance. In solving this issues organizations have to put in place an underlying theory and standards (Rao, 2008). This will prevent errors and confusion that arises after reading such documents. Key...
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...transactions and events: This is the first step of accounting process. It identifies the transactions of financial character that is required to be recorded In the books of accounts. Transactions is transfer of money or goods or services from one person or account to another person or account. 2. Measuring: This denotes expressing the values of business transactions and events in terms of money 3. Recording: It deals with recording of identifiable and measurable transaction and events in a systematic manner in the books of original entry that are in accordance with principles of accountancy. 4. Classifying: It deals with periodic grouping of transactions of similar nature that appear in the books of original entry into appropriate heads by posting or transfer entries 5. Summarizing: It deals with summarizing or condensing transactions in a manner useful to the users. This function involves the preparation of financial statements such as income statement, balance sheet, statement of changes in financial position and cash flow statement 6. Analyzing: It deals with the establishment of relationship between the various items or group of items taken from income statement or balance sheet or both. Its purpose is to identify the financial strengths and weakness of the enterprise. The above six present day scenario are generally performed using software packages 7. Interpreting: It deals with explaining the significance of those date in a manner that the end...
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...ACCOUNTING: Accounting is famously known as the "language of business". Through the financial statements, the end-product reports in accounting, it delivers information to different users. Accounting is a means through which information about a business entity is communicated. Accounting Definition: Technical definitions of accounting have been published by different accounting bodies. The American Institute of Certified Public Accountants (AICPA) defines accounting as: "the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least of financial character, and interpreting the results thereof." To further understand what accounting is, we must take a look at the different definitions. Accounting as a Science: Accounting is the process of identifying, measuring, and communicating economic information to permit informed judgment and decisions by users of information. Accounting as an Art: Accounting is the art of recording (journalizing), classifying (posting to the ledger), summarizing in a significant manner and in terms of money, transactions and events which are, in part, at least of a financial character, and interpreting the results thereof to interested users. Accounting as an Information System: Accounting is a service activity, which functions to provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic...
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...Question 3: The presentation of financial statement information in common-size amounts rather than dollar amounts means that the items in the financial statement are presented as a percentage, instead of a dollar amount (Edmonds, Tsay, & Olds, 2011). This type of presentation is sometimes more meaningful when analyzing two or more organizations of differing size against each other, as well as analyzing these organizations over various time periods (Edmonds, Tsay, & Olds, 2011). Essentially, common-size amounts allow an individual to quickly compare different organizations, or the same organization’s performance over time by reducing the bias of dollar amounts (Edmonds, Tsay, & Olds, 2011). Common-size amounts present a better comparison of the organizations financial health and enable the organization to better analyze internal and external trends (Edmonds, Tsay, & Olds, 2011). Most organizations use debt-to-equity ratio, profitability, gross profit margin or operating profit margin percentages in the financial statement to quickly compare different organizations or to compare the organizations financial health (Cheng, 2014). Debt-to-equity ratio assesses a proportion of...
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...the year with a net loss of $895,000. Hence, it is obvious that the problem stems from costs. Analysis The Income Statement for 2012 results in a net loss due to the mistreatment of inventorial and period costs. The costs for manufacturing bourbon whiskey, that requires a 4-year-period of maturing before being ready for the market, burden current revenues. These costs (the cost of bottling, labor and supplies expense of chemical laboratory, cost of barrels used, warehouse labor and warehouse supervisor) are inventorial costs that increase the inventory amount (assets) in the Balance Sheet, and they are going to match revenues at the time they get sold, as part of Cost of goods sold in the relevant Income Statement. In the case the manufacturing costs for bottled whiskey are not considered in the Income Statement for 2012, the net loss changes into a net income of $682 million (Exhibit 1). Costs of goods sold cannot increase dramatically in case revenues constantly held. In that case, a company that has been profitable for years and is now making a good investment based on a serious market analysis can end up with a loss. It affects the company`s financial health and image in the eyes of the customers, creditors, investors, suppliers, employees and all the stakeholders. Consequently, the right allocation of costs is essential for preparing statements with relevant information that users can understand...
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...Analyzing a Summary Analysis for Candela Corporation Analyzing a Summary Analysis To analyze a statement of cash flow means to investigate the cash flow of a company's operations, and study the cash inflows and outflows. Candela had severe growth in 2002 that severely affects the net cash of operating activities. Analyzing the cash flow may have given Candela the opportunity to change its cash from operations. An analysis of a cash flow will give the reader an indication of what changes would improve the company's growth. A cash flow statement divides three functions of a business into operating, investing, and financing. Interpreting the information is essential for a creditor, banker, investor, or even management. The cash flow provides details of cash changes between the periods of other statements. One of the most important factors is how the cash outflow reduces the inflows, and the effect each may have on operations. The details from the cash are taken from the balance and income statements (Fraser & Ormiston, 2007).. The Candela Corporation provides laser systems for the medical field. Performance of laser treatments are cosmetic, or necessary removal of a variety of undesirable physical appearances. Candela provides laser systems worldwide. An increasing desire of improving physical appearance among Baby Boomers contributes to Candela's growth in the 1990s (Fraser & Ormiston, 2007). In 2002, Candela's consolidated cash flow statement shows a net cash from operations...
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...HW No. 5 Answer the following questions from the textbook: E6 - 35 Estimating Useful Life and Percent Used Up The property and equipment footnotes from the Deere & Company balance sheet follows The property and Depreciation A summary of property and equipment at October 31 follows: Property and Equipment (millions) | Useful Lives (years) | 2010 | 2009 | Land | | $113 | $1,166 | Buildings and building equipment | 23 | 2,226 | 2,144 | Machinery and equipment | 11 | 3,972 | 3,826 | Dies, patterns, tool, etc. | 7 | 1,105 | 1,081 | All other | 5 | 685 | 672 | Construction in process | | 478 | 362 | Total at cost | | 8,579 | 8,501 | Less accumulated depression | | 4,856 | 4,744 | Total | | $3,723 | $3,457 | Property and equipment is stated at cost less accumulated depreciation. Total property and equipment additions in 2010, 2009 and 2008 were $802 million, $798 million and $1,147 million and depreciation was $540 million, $513 million and $467 million, respectively. a. Compute the estimated useful life of Deere’s depreciable assets at year-end 2010. (Hint: Exclude land and construction in process.) How does this estimate compare with the useful lives reported in Deere’s footnote disclosure? b. Estimate the percent used up of Deere’s depreciable assets at year-end 2010. How do you interpret this figure? E6 – 37 Computing and Assessing Plant Asset Impairment On July 1, Zeibart Company purchases equipment for $225,000. The equipment has an...
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...Interpreting Financial Results FIN/571 – Foundations of Corporate finance February 4, 2016 Abstract This summary examines Marathon Oil Corporation’s financial statements from the past three years. Financial ratios such as liquidity ratios, leverage ratios, and solvency ratios are discussed and interpreted against the company’s historical data and compared to industry benchmarks. The financial ratios will be used to determine the company’s current financial position how they rank compared to other industry companies. Interpreting Financial Results A financial ratio is an effective instrument that is used in conducting company analysis. These ratios are also useful in important business decision making (Hoskin, Fizzell & Cherry, 2014). There are a number of financial ratios that can be used to conduct analysis. The aspect of the financial comparisons that are under question, determines which financial ratios are best to use. Marathon Oil Corporation is an independent international company and was originally called Ohio Oil Corporation. The organization was originally established in 1887 (Marathon Oil, 2015). As of today, Marathon Oil continues to pull in profits despite the tremendous drop in oil prices. Marathon Oil functions as an energy company and operates in three segments. The company supplies products and services to both large and small organizations. Marathon Oil’s financial data, for years 2014, 2013, and 2012 shown below, provides a clear...
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