...buyback from shareholders. Treasury stock does not pay dividends, there are no voting rights attached, and should not be included in the outstanding share calculations. A company making a public offering usually creates treasury stock. Not all shares are approved for sale. Some shares are held back and used to create extra cash later. Another reason some shares are held back is to ensure controlling interest. Treasury stocks are created when a company does a buyback. This is beneficial to shareholders because it lowers the number of outstanding shares located in the shareholder equity section of the balance sheet, often seen as a negative number there. The company debits Treasury Stock and credit Cash. Cash paid to buyback stock is recorded in the contra-equity account. Stock Splits A stock split is the number of outstanding shares of stock increased; with no impact on any of the equity account balances. The increases in the number of stock will decrease the market price. Companies do this to keep shares at a reasonable price and attract potential investors. No accounting entry is necessary when a stock split occurs. Stock splits do not dilute the ownership interests of existing shareholders. Reverse stock splits can occur when the company reduces the number of shares outstanding. A memorandum note is enter to indicate the change in shares and changes in par value. Retained Earnings Retained earnings do not represent surplus cash left over after payment of dividends. It demonstrates...
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...Lowell’s Country Music Bar Balance Sheet Working Capital 90,000 Debt to assets ratio 40% Assets Current assets Cash $21,000 Accounts receivables $42,000 Inventory (A) $55,500 Prepaid expenses $9,000 Total current assets (B) $127,500 Long-term...
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...decision to loan money to Twist and Shout. You will see that we have separated our calculations into three different sections listed A, B and C. As you will see in section A, we calculated that the company’s gross profit increased from $853,000 in 2012 to $963,000 in 2013 and that their Net Income almost tripled going from $38,000 in 2012 to $94,000 in 2013. The increase in their gross profit in 2013 means that they did not incur much more expenses compared to 2012, and their sales were still very high. We believe that their company knows how to expand and increase their income while still keeping their expenses at a minimum. The Net Income also shows us that they selling their services for a good profit while not spending much on their expenses. In section B, we have compiled the company’s results for the common balance statement with the common income sheet. The common balance sheet visualizes the company’s current assets, property and equipment, liabilities and stockholder’s equity, current liabilities, long term liabilities, and stockholder’s equity. The balance sheet is an easy way to visualize that the total assets have increased by .036% in the last fiscal year, as well as an increase in total liabilities and equity. The common income sheet visualizes the revenue, gross profit, operating expenses, income from operations, and net income. In section C we calculated various ratios to give you a better idea of the company’s success. As you will see we calculated a...
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...statements that would have financial information reported, there are, there are four standard types of records that are used. The purpose for this paper is to differentiate between the four financial statements and determine which statements would be beneficial to investors, creditors, and the organization. Balance Sheet A balance sheet consists of three parts and provides a simple financial snapshot from a specific point in time. The balance sheet uses Assets = Liabilities + Stockholder’s Equity as the equation for the balance sheet. The assets are on one side with liabilities and stockholder’s investment on the other. This should show a balance that would be useful for investors. “Investors use balance sheets to evaluate a company's financial health. The balance sheet provides a look at a firm's assets and liabilities, enabling investors to make a determination regarding the firm's health and compare the results against the firm's competitors.” ("Off-Balance-Sheet Entities: An Introduction", n.d., para. 2). Income Statement The income statement is revenue minus expenses equals net income. This report shows if money was earned or lost over a period of time. Unlike a balance sheet, the income statement is the performance over a period of time. This statement is used to check if a company is profitable. A creditor would find this information helpful in determining if a business would be trustworthy on making payments on a loan....
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...Application of Financial Statement Strayer University A balance sheet is a financial statement that reports the assets, liabilities, and stockholder’s equity at a specific point in time. The balance sheet is like a snapshot of the financial condition of a company. The asset section lists everything that the company owns, such as cash, inventory, accounts receivable, and long-term assets such as property, land or equipment. The asset section helps analysts, investors, and creditors understand what a business owns and what their objectives are. The liability section of the balance sheet reports what a company owes, such as debts or loans. Liabilities are divided into two separate sections, current and long-term liabilities. Current liabilities are financial obligations that are to be paid within the coming year such as accounts payable and short-term loans. Long-term liabilities are obligations that the company expects to pay after one year such as bonds payable and mortgage payable. In understanding the assets and liabilities sections of the balance sheet, the manager can evaluate the relationship between the current assets and current liabilities. These relationships can be expressed in ratios such as the current ratio and working capital. The current ratio is calculated by dividing the current assets by the current liabilities. Working capital is calculated by subtracting the current liabilities from the current assets. The amount of working capital is an indicator of the...
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...retained earnings statement, the balance sheet, and the statement of cash flows. There is a specific use for each one of these statements, and they all work together to show what is going on within a company. These statements also help the internal users, such as the managers and employees, in many ways. These statements also help the external users, such as the creditors and investors, in many ways. Each statement, their use, and how they help the internal and external users will be explained in the following. Four Basic Financial Statements: When looking at the income statement you will see a list of expenses that show what has been spent within a certain time frame. The main expenses that are Revenues and Expenses, these are broken down more in depth to explain where the money is going. An income statement is what a company uses to report if a company is failing or successful. In other words tells how a company is doing by showing the operations of the company in a period, whether it is a day-to-day period or a year-to-year period. When looking at the retained earnings statement, there is a chart with the retained earnings, with the beginning of the time period and retained earnings at the end of the period. This statement is used to show what amount was that was retained and the reason for it being retained in a period. As a better definition, the retained earnings are what is retained from the net income of a company. The balance sheet is where reports are added to a...
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...Steve Jobs, Steve Wozniak, and Ronald Wayne established Apple and incorporated it in 1977, in California. Apple has grown into a multibillion-dollar business and has become a Fortune 500 companies. I chose Apple because I own many other Apple products. Apple started with just the Macintosh computer. Now, they have created other popular items like the Ipad, Iphone, Ipod, Iwatch, and Macbook computers. “The Company’s business strategy leverages its unique ability to design and develop its own operating systems, hardware, application software and services to provide its customers products and solutions with innovative design, superior ease-of-use and seamless integration.”(Apple Inc. 2014) Balance Sheet The balance sheet shows the assets, liabilities, and stockholder’s equity. The balance sheet reports that current assets are $68,531 million and the total assets are $231,839 million. The current liabilities are $63,448 million and the total liabilities are $120,292 million. The working capital of $5,028 million shows that Apple is able to pay off their short-term debts. The working capital is the current assets minus the current liabilities. The current working capital ratio is 1.08:1. This is the current assets are divided by the current liabilities. The working capital ratio is not a strong ratio. This means that they can pay all their debt off, yet not have very much left after that. It is important for the company to look for different ways to increase their working capital...
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...Owner’s Equity Owner’s equity or shareholder’s equity is the residual interest in the assets of the organization after deducting all of its liabilities (What is Owner’s Equity, n.d.). In an organization, assets can either belong to people you owe money to (liabilities) or the owner itself. Therefore, owner’s equity can only represent what an owner can lay claim to. Owner’s equity or stockholders equity is usually listed under the balance sheet. Under the stockholder’s equity section you may find the paid-in capital and the retained earnings portion minus the treasury stock which comprises the total stockholder’s equity balance (Accounting Coach, n.d.). While as an investor it is important to pay attention to each aspect of the balance sheet; this paper will particularly focus on the importance of paid-in capital. Paid-in capital, which is also referred to as contributed capital is listed under stockholder’s equity in the balance sheet. It is the amount of capital that has been paid in during common or preferred stocks issuances by investors (Paid in Capital, n.d.). Important factors to note is that paid in capital does not come from operations but only from investors (Paid in Capital, n.d.). Keeping paid-in capital separate from earned capital is also important. Earned capital is money that a company receives as a result of profitable operations (Jacobsen & Wachterhauser, n.d.). Paid-in capital comes from the sale of capital stock (Jacobsen & Wachterhauser, n.d...
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...OL 501 Final Project worksheet Worksheet C Instructed by Dr. Alan Aylor Christian Martino Question and Answer Sheet Southern New Hampshire University 02/25/2017 ____________________________________________________________________________ 1. How can management information, such as financial statements, help management and investors make more informed decisions? Are there any risks associated with the compilation and analysis of information, for example, accuracy or relevance? How can such risks be minimized? • Financial statements help management by using balance sheets, income statements and cash flow statements. They are part of an accounting report that a company can communicate their financial information. These...
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...statement and balance sheet in regards to timing is the following: * An income statement is a report that contains information in regards to an organizations’ assets and financing in order to obtain those assets that is collected over a certain period of time * A balance sheet is snapshot of the financials for that organization (with assets on the left and liabilities on the right side) for that particular date that was requested Ch 4, Ques 4.5 a, b, c a) The difference between long term investments and property and equipment on the balance sheet are as follows: * Long term investments are reported on the balance sheet at a fair market value instead of the purchase price meaning that when the market fluctuates so will the value price associated with it * The property and equipment or fixed assets are initially listed on the balance sheet for their purchase price and then annually depreciated for normal wear and tear b) The difference between gross fixed assets and net fixed assets are: * Gross fixed assets are physical assets such as property, equipment, etc. that is calculated as the purchase price of what the organization has paid for them. They have a life of more than one year. * Net fixed assets is also known as the book value which is the purchase price minus the depreciation of that physical asset c) How does depreciation expense on the income statement relate to accumulated depreciation on the balance sheet? Depreciation...
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...Chapter 2 A company would withhold certain financial information from external parties if the information. I believe that it is unethical for company managers to limit the information available to their internal decision makers. It is unethical 2-54 1. Consistency-The same measurement application methods are used over time. 2. Neutrality - The accounting information is free of bias. 3. Feedback Value-The information provides input to evaluate a previously made decision. 4. Comparability-The information allows the evaluation of one alternative against another alternative. 5. Verifiability -In assessing the information, qualified persons working independently would arrive at similar conclusions. 6. Predictive Value-The information helps reduce the uncertainty of the future. 7. Relevance-The information has a bearing on a particular decision situation. 8. Timeliness-The information is available soon enough to be of value. 9. Reliability-The information is dependable. 10. Representational faithfulness- There must be agreement between what the information says and what really happened. 2-55 1. Data-The raw results of transactions and events. 2. Management Accounting-A branch of accounting developed to meet the information needs of internal decision makers. 3. Information-Data transformed so they are useful n the decision making process. 4. Cash Flow-The movement of cash in and out of a company...
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...d. Web site | http://www.peets.com/ | e. State of Incorporation | Washington | f. Independent Auditor | Deloitte & Touche LLP | g. Company’s Fiscal Year End | January 2nd, 2011 | | 2. List up to five products or services your company sells or provides. Products | | | Coffee | | Gift Cards | Tea | | “Sweets” (Chocolates, cookies, etc.) | Espresso Equipment | | | Tea Accessories | | | Coffee Mugs | | | 3. Size of Company. a. Dollar amount of Assets: | 44,629 | b. Dollar amount of Sales/Revenues: | 333,808 | c. Net Income: | 17,501 | d. Basic Earnings per Share: | 13,038 | e. Number of Common Shares outstanding: | 13,063 | 4. Use the financial highlights section of your company’s annual report to note the following information. (Note: FYE may need to be adjusted depending on most recent information available) Item | | FYE 2010 | | FYE 2009 | | FYE 2008 | | FYE 2007 | Net Income | $ | 17,501 | $ | 19,252 | $ | 11,165 | $ | 8,377 | Total Assets | $ | 208,832 | $ | 204,803 | $ | 176,352 | $ | 177,547 | Total Liabilities | $ | 36,332 | $ | 39,747 | $ | 32,445 | $ | 30,294 | Long-term Debt | $ | 1,021 | $ | 8,100 | $ | 7,400 | $ | 5,420 | Dividend per share | $ | 0 | $ | 0 | $ | 0 | $ | 0 | Earnings per share (basic EPS) | $ | 1.28 | $ | 1.44 | $ | .80 | $ | .66 | 5. From Management’s Discussion and Analysis...
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...AC 304 SEC PROJECT COMPANY: MICROSOFT GARY MELCONIAN AC 304 DR. FRANK BENSON SEC FILING REPORT: This SEC filing project is designed to aid you in understanding the content of published financial statements and to observe form and terminology. You are to refer to the financial statements of an agreed upon company contained in Form 10-K filed with the Securities and Exchange Commission and respond to the following for the most current and immediately preceding year (you may omit thousands if you wish). Please disclose numerators and denominators used in your calculations and page numbers where those numbers were obtained. a. Income Statement: 1. Is this a comparative statement? Answer: Yes it is a comparative statement and it can be found on page 18. 2. Is this a consolidated statement? Answer: Yes it is a consolidated statement and you can see this on page 18. 3. Are there any unusual or infrequent items? How are they presented? Answer: Yes there are unusual and infrequent items on the income statement and it is presented in a multi step income statement format. This can be found on page 18. 4. What is the effective income tax expense rate for continuing operations? Answer: The tax rate is 32% and it can be found on page 13. 5. Are there any discontinued operations? Answer: No there are no discontinued operations. This can be found on page 18. 6. Are there any extraordinary operations...
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...Chapter 2 Financial Statements and Cash Flow 财务报表与现金流量 2-0 Key Concepts and Skills • • • • • Understand the information provided by financial statements Differentiate between book and market values Know the difference between average and marginal tax rates Know the difference between accounting income and cash flow Calculate a firm’s cash flow 2-1 2.1 The Balance Sheet （资产负债表） An accountant’s snapshot of the firm’s accounting value at a specific point in time The Balance Sheet Identity is: Assets ≡ Liabilities + Stockholder’s Equity 2-2 U.S. Composite Corporation Balance Sheet 2-3 Alphabet Inc. - Assets Assets As of December 31, 2014 As of December 31, 2015 Current assets: Cash and cash equivalents Marketable securities Total cash, cash equivalents, and marketable securities Accounts receivable Receivable under reverse repurchase agreements Income taxes receivable, net Prepaid revenue share, expenses and other assets Total current assets Prepaid revenue share, expenses and other assets, non-current Non-marketable investments Deferred income taxes Property and equipment, net Intangible assets, net Goodwill Total assets $ 18,347 46,048 $ 16,549 56,517 64,395 9,383 11,556 875 450 591 1,903 3,412 3,139 78,656 90,114 3,187 $ 73,066 3,181 3,079 176 23,883 4,607 15,599 129,187 5,183 251 29,016 3,847 15,869 147,461 $ 2-4 Alphabet...
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...Financial Statements Papers Part I Sherrie Christian ACC/497 April 8, 2013 Rick Kwan, MBA Financial Statements Papers Part I The financial statements are important as they inform the users of the economic health and stability of the entity. Each financial statement provides information to determine economic health, such as financial position, performance, and changes. Assets, liabilities, and equity provide a measurement of financial position. Income and expenses provide a measurement of performance. The income statement is a vital section of the financial statements, also known as the profit and loss statement. The income statement presents revenue balances, and profits for a specific period of reporting. The income statement presents sales, cost of sales, operating and non-operating expenses, and the income for the prior three reporting periods. The income statement presents awareness of changes or the lack of changes in the sales balances, cost of sales, and operating and non-operating expenses. The income statement provides comparisons of prior reporting periods to current reporting periods. The income statement measures the business performance in terms of revenue, and net income. Managers practice income statement analysis to work out inefficiencies, and processes that are ineffective. Revenue, expenses, and net income are the major parts of the income statement. A financial statement user can view the Home Depot Statement of Earnings for the fiscal year ending February...
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