Ashford week 4 discussions

Dear Class:

Last week we took a look at inventory accounting from a corporate perspective were able to see the effects of inventory transactions on the financial statements. Chapter 5, “Inventory” walked us through some of the nuances of how a company may report certain assets in financial statements at different amounts depending on the accounting methods chosen. For example, a company using the FIFO method will report inventory at a different value than it would if it used LIFO.

This week we introduce the concept of accounting for both current and long-term liabilities and the preparation of a classified balance sheet. We will focus on how liabilities and interest expense affect the financial statements and how the recognition and payment of interest affects the income statement and statement of cash flows differently

We will also engage in a dialogue related to how companies like Enron misrepresented earnings by manipulating or reporting debt in a manner different from generally accepted accounting principles (GAAP).

As a final point, it is important to recognize that many businesses operate using debt as a tool. Not all debt is the same. There are debts that are paid off relatively quickly, and other debts that are paid off over an extended period of time. Knowing how to classify a company's debts is important when assembling the financial balance sheets, income statement and the statement of cash flow.

In the interest of keeping your learning experience rich, I have made available to you PowerPoint presentations for both Chapter 5 and 6. You can download the PowerPoint presentations for Chapter 5 and 6 from Discussion 1.

As a final note, please be sure to stay active in our discussions as the concepts we will chat about will have lots of relevance to you in your daily lives as students and professionals.