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ACCT 212 Financial Accounting Complete Course<br />
Discussion<br />
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ACCT 212 Financial Accounting Complete Course Discussion<br />
ACCT 212 Week 1<br />
Introduction to Financial Statements – Discussion<br />
Financial Statements (graded)<br />
One key concept for week 1 is that financial statements are comprised of 4 statements: 1)<br />
Income Statement, 2) Balance Sheet, 3) Cash Flows Statement, and 4) Statement of<br />
Retained Earnings.<br />
External users of financial statements, such as investors or banks, review the financial<br />
statements to perform analysis on the company. For example, to determine if s/he wants to<br />
buy the stock of a company, the investor may review how much profit the company has<br />
generated during the past two years. Or, to determine if a bank should provide a loan to<br />
the company, the loan officer may review the company’s cash balance from the previous<br />
two years.<br />
Which financial statement do you believe provides the best information to determine if a<br />
company is performing well financially and/or is financially stable? Why?<br />
ACCT 212 Week 2<br />
The Accounting System and Accrual Accounting – Discussion 1<br />
Prepaid Expenses vs. Unearned Revenue (graded)<br />
From this week’s reading, you were introduced to the concept of unearned revenue and<br />
prepaid expenses. Imagine that you are CFO of a company that manufacturers picture<br />
frames. Your company wants to become more vertically integrated, meaning it no longer<br />
wants to purchase the products that go into the frame, but rather manufacture them. To do<br />
this, your company has decided to acquire a glass manufacturing company. There are two<br />
glass manufacturers that your company is deciding between: Glass R’ US and Glass Team.<br />
In reviewing the balance sheet of each company, you noticed the following:<br />
a. Glass R’ US has a large amount of Unearned Revenue and no Prepaid Expenses.<br />
b. Glass Team has a large amount of Prepaid Expenses and no Unearned Revenue<br />
In your discussion post, explain what unearned revenue and prepaid expenses represent.<br />
Then, basing your decision solely on the amount of unearned revenue and prepaid expenses<br />
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<br />
example, “I believe having a large amount of prepaid expenses is a better position because<br />
….”)<br />
ACCT 212 Week 2: The Accounting System and Accrual Accounting – Discussion 2<br />
Accrual vs. Cash Accounting (graded)<br />
US GAAP dictates that all financial accounting use accrual accounting. This means that if a<br />
company must use accrual accounting if they want to state that their financial statements<br />
are in accordance with US GAAP. However, some companies, particularly smaller,<br />
privately-owned companies, use cash accounting.<br />
What is the difference between accrual and cash accounting? Which accounting method do<br />
you prefer and why?<br />
ACCT 212 Week 3<br />
Internal Controls, Cash, Short-term Investments and Accounts Receivables Discussion 1<br />
Ethical Business Decisions (graded)<br />
Unfortunately, a quick scan of the business news will normally result in reports of<br />
unethical business behavior. To prove this point, let’s start with a review of the news for<br />
stories about fraud and other unethical behavior in business. You can use the University<br />
Library to start your search. Once you have located an article share it with the class by<br />
developing a summary of the important information. Make sure that you give credit to<br />
your source.<br />
ACCT 212 Week 3: Internal Controls, Cash, Short-term Investments and Accounts<br />
Receivables – Discussion 2<br />
Trade Credit – Accounts Payable (graded)<br />
The ability to extend trade credit is a benefit to both sides of the transaction. The seller can<br />
increase sales while the buyer can conduct business without spending cash immediately.<br />
(For example, imagine you own a business the sells wood to construction companies that<br />
build homes. Using trade credit, the construction company can purchase the wood without<br />
spending cash immediately and you as the owner have more sales!) It sounds like a perfect<br />
relationship and it would be if people were not involved.<br />
Let’s take a look beyond the obvious and discuss the pros and cons of Accounts Receivable.<br />
Why do companies offer trade credit, and what are the problems?<br />
ACCT 212 Week 4<br />
ACCT 212 Week 4: Inventory Management – Discussion 1<br />
Inventory Management (graded)<br />
A review of the balance sheet of a retailer, such as Wal-Mart, will disclose that in current<br />
assets the majority investment is in inventory. With manufacturers, such as Ford, the<br />
inventory is spread between three different categories. Let’s start our discussion with some<br />
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<br />
inventory valuation method have?<br />
ACCT 212 Week 4: Inventory Management – Discussion 2<br />
LIFO (graded)<br />
Under US GAAP, management has choices about how to value current inventory and also<br />
the cost of goods sold. For example, they can choose LIFO or FIFO to value their<br />
inventory.) However, under International Financial Reporting Standards (IFRS), LIFO is<br />
not an option. To be in compliance with IFRS, international companies cannot use LIFO.<br />
Therefore, the majority of companies use FIFO to value their inventory and thus calculate<br />
cost of goods.<br />
Explain what LIFO means. Then, state whether you believe that IFRS is correct in<br />
disallowing LIFO to value inventory and provide your reasoning.<br />
ACCT 212 Week 5<br />
ACCT 212 Week 5: Plant Assets and Liabilities – Discussion 1<br />
Non-current Assets and Related Liabilities (graded)<br />
In the spotlight about FedEx Corporation, you get a feel for the amount of investment in<br />
assets and the resulting liabilities that are required to operate a competitive corporation.<br />
Even small businesses require plant, property and equipment to compete and normally rely<br />
on some form of debt to finance itself. Let’s start up a company that sells auto parts like<br />
Napa or Auto Zone. What assets would we require? How might we finance them?<br />
ACCT 212 Week 5: Plant Assets and Liabilities – Discussion 2<br />
Raising Capital (“Cash”) (graded)<br />
Bonds are a unique way of financing only available to corporations and governments. It<br />
allows them to bypass the middle man, the bank, and therefore save costs of borrowing.<br />
They normally make semiannual interest payments on the principal and the principal is<br />
due at some time in the future…it is not uncommon for decades to pass before the principal<br />
payment is due.<br />
Imagine that you are the CFO of a company looking to raise capital. (This means that the<br />
company wants to receive a large, one time influx of cash.) The CEO asks you to<br />
recommend if the company should sell bonds or issue more common stock. Which one<br />
method would you recommend to raise capital and why?<br />
ACCT 212 Week 6<br />
ACCT 212 Week 6: Stockholders Equity and the Statement of Cash Flows – Discussion 1<br />
Stockholders Equity (graded)<br />
There are two basic classes of stock that exist: common stock and preferred stock. Since<br />
more than one class of stock is available to investors, an investor must determine which<br />
class of stock they would prefer to invest in. Additionally, a company must decide which<br />
class of stock they would like to issue.
In this discussion post, discuss the following: What are the advantages and disadvantages<br />
of each? Imagine that you created a newly formed entity. Would you issue common stock,<br />
preferred stock, or both? Why?<br />
ACCT 212 Week 6: Stockholders Equity and the Statement of Cash Flows – Discussion 2<br />
Net Income vs. Net Operating Cash (graded)<br />
Net Income and Net Operating Cash Flows are both important indicators of the health of a<br />
company. But why are they different? What do they have in common, and what makes<br />
them so important? Is there a relationship with the other sections of the cash flow<br />
statement? From an investors perspective, what are those relationships.<br />
Start this discussion out by looking into these questions and addressing them.<br />
ACCT 212 Week 7<br />
ACCT 212 Week 7: Financial Statement Analysis – Discussion<br />
Financial Statement Analysis (graded)<br />
If you were to get a physical from your Doctor and they only took your blood pressure<br />
prior to stating that you are in good health, would you be concerned? If you have noticed in<br />
your readings starting in Chapter 3 that there has been explanation of the methods by<br />
which you could determine the financial health of a company. Name one and explain how it<br />
is computed? Which financial statement(s) does the input come from? Most importantly,<br />
what does it tell you about the financial performance or health?