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By Week 5, Day 3, respond to both discussion prompts, and submit your responses to this Discussion Area. Start reviewing and responding to your classmates as early in the week as possible. You should review and critique the work of at least two other students in each discussion question.

 

Topic 1:

Retail firms are at risk that their inventory will become obsolete. What can a firm do to minimize this risk? What types of firms are most at risk? Least at risk? Select a retail firm that you think might be concerned about obsolete inventory and another that you believe would not be very concerned. Then, find their financial statements and calculate the inventory turnover ratio of these two firms for the past two fiscal years. Are your results what you expected? Explain what you expected to find and your results.                   

Topic 2:

In Week 1 you examined the four basic financial statements for a publicly traded corporation. You used the search tool here: http://sec.gov/edgar/searchedgar/companysearch.html. Answer the ten questions you asked about the financial statements. For the questions you are unsure about, provide a possible method for determining the answer (additional research, etc.). Help other students with questions they are unable to answer.


Week1 assignment:

 Lourdes Arenal Email this Author 6/28/2015 4:38:24 PM
 

Maxidrive Corporation

Maxidrive is a publicly traded company and its financial statements as at 31, December, 2006.

Total assets-                                        $27,261

Liabilities-                                           $16,156

Shareholders equity-                           $11,105

Income statement- net income-           $3,300

 

Information provided

The balance sheet (which includes total assets, total liabilities and shareholders’ equity) represents the financial position of an entity or firm at a particular point in time. This is done through the basic accounting equation which states;

Assets = Liabilities + Stockholders Equity

The income statement reports revenues of the firm after deducting expenses of the accounting period.

The purpose of all the financial statements and reports is to act as a basis of communication of financial information and data to third parties such as financial institutions and investors.

 

 

Questions

  1. What information do the four financial statements represent?
  2. Why is necessary to prepare financial statements and report them?
  3. What is the relationship between the four financial statements?
  4. What is the purpose of preparing the income statement?
  5. What does the balance sheet show as the current financial standing of the firm?
  6. What is the governing body of accounting?
  7. What are some of the regulations laid down by the accounting body?
  8. What is the role played by investors and financial institutions when it comes to drafting financial statements and reports?
  9. How does the management of a firm use the information provided by the accounting equation in coming up with its decisions?
  10. How is the information provided by the income statement used in the firm?

 

 

 

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