accounting assignment
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· Write a 3- to 5-page essay about the ethical and financial implications of insider trading.
Note: Some of the assessments in this course build upon each other, so you are strongly encouraged to complete them in the order in which they are presented.
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Investors depend on the information from financial statements in making investment decisions. However, if a company's financial information is used or shared before it is released to the public, this could cause substantial movement in the price of a company's stock. Some individuals do not see anything unethical about insider trading, yet it is a criminal offense, one for which even well-known and respected individuals have served, and are serving, time in prison. CPAs agree to a professional code of conduct upon licensure, but it is important to develop your own conclusions regarding the ethical implications of financial reporting, planning, and decision making within an organization.
By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria:
· Competency 2: Examine regulatory, ethical, and credibility issues in accounting
1. Analyze how insider trading may affect general business management planning and decision making.
1. Analyze the ethical implications related to financial decisions concerning inside information.
. Competency 5: Communicate in a manner that is professional and consistent with expectations for members of the business professions.
2. Communicate in a manner that is professional and consistent with expectations for members of the business professions.
Competency Map
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Resources
Suggested Resources
The following optional resources are provided to support you in completing the assessment or to provide a helpful context. For additional resources, refer to the Research Resources and Supplemental Resources in the left navigation menu of your courseroom.
Library Resources
The following e-books or articles from the Capella University Library are linked directly in this course:
. Murthy, G. (2009). Financial accounting . Mumbai, India: Himalaya Publishing House.
. Vataliya, K. S. (2009). Practical financial accounting: Advance methods, techniques and practices . Jaipur, India: Paradise Publishers.
. Doran, D. T. (2012). Financial reporting standards: A decision-making perspective for non-accountants . New York, NY: Business Experts Press.
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Course Library Guide
A Capella University library guide has been created specifically for your use in this course. You are encouraged to refer to the resources in the MBA-FP6014 – Financial Accounting Library Guide to help direct your research.
Bookstore Resources
The resources listed below are relevant to the topics and assessments in this course. These resources are available from the Capella University Bookstore. When searching the bookstore, be sure to look for the Course ID with the specific –FP (FlexPath) course designation.
. Libby, R., Libby, P., & Hodge, F. (2017). Financial accounting (9th ed.). New York, NY: Irwin.
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Assessment Instructions
Based on your own experience and knowledge with financial reporting, planning, and decision making, develop conclusions and explain the ethical implications of financial decisions within an organization. You may need to do additional research on the implications of using insider information (for example, the case of Martha Stewart) to help you complete this assessment.
Write an essay in which you respond to the following:
. Why is insider trading considered unethical? Keep in mind that some individuals do not see anything unethical about it, even though it is a criminal offense.
. Would allowing insider trading, even if it were ethical, hinder the operation of the stock market in raising capital for new and existing companies? Explain.
You must use two or more scholarly sources in your essay to support your responses.
Additional Requirements
. Length: Your essay should be 3–5 typed, double-spaced pages, including a title page and references.
. Written communication: Written communication should be free of errors that detract from the overall message.
. Style and formatting: Use current APA style to format your essay and cite your references. You must use at least two references in your essay.
. Font and font size: Times New Roman, 12 point.
Ethical Issues: Ethics and Insider Trading Scoring Guide
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[u10a1] Ethical Issues: Ethics and Insider Trading
Write a 3- to 5-page essay about the ethical and financial implications of insider trading.
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Accounting/Accounting/Assessment 2/Assessment 2.docx
Assessment 2
· For this assessment, complete the problem below. You may use Word or Excel to complete the assessments throughout this course, but you will find Excel to be most helpful for creating spreadsheets. Tutorials for using Excel are provided in the Supplemental Resources in the left navigation menu. If you use Excel, submit the assessment in one Excel document, using separate tabs for each spreadsheet.
To complete this assessment, you may choose to use the Assessment 2 Problem Template linked in the Suggested Resources under the Capella Resources heading.
Transactions
Audrey Jhingree opened an ice cream parlor in a university town. The parlor specializes in ice cream combinations named after popular professors in the business department of the university. You have been hired as a manager. Your duties include maintaining the store's financial records. The following transactions occurred in April 2012, the first month of operations:
· a. Received cash of $40,000 total ($10,000 each) from four investors. Each investor received 100 shares of common stock. This took place on April 1.
· b. Paid three months' rent for the store on April 1 at $2,000 per month (recorded as prepaid expenses).
· c. Purchased ice cream and cones for $6,000 on account payable, due in 60 days. This took place on April 2.
· d. Purchased supplies for $1,000 cash on April 2.
· e. Received a two-year $11,000 loan at the bank. The note payable is dated April 2.
· f. Used the money from (e) to purchase a computer for $3,000 (for record keeping and inventory tracking) and to purchase $8,000 of used furniture and fixtures for the store.
· g. Placed a grand opening advertisement in the local paper for $600 cash.
· h. Made sales in the first half of the month totaling $5,000: $4,250 was in cash and the rest was on accounts receivable. The cost of the ice cream sold was $2,000.
· i. Made a $600 payment on accounts payable on April 18.
· j. Incurred and paid employee wages of $2000 for the month of April.
· k. Collected accounts receivable of $700 from customers.
· l. Made a repair to one of the refrigerators for $300.
· m. Made sales in the last half of the month for $6,000, all for cash. The cost of the ice cream sold was $2,400.
Recording Transactions, Posting to T-Accounts, Preparing Financial Statements, and Commenting on What Financial Statements Tell Potential Investors
Using the information provided above, complete the following for Audrey Jhingree's ice cream parlor. To complete this problem, you may choose to use the Assessment 2 Problem Template, which is linked in the Suggested Resources under the Capella Resources heading.
1. Set up appropriate T-accounts for cash, accounts receivable, supplies, inventory, prepaid expenses, equipment, furniture and fixtures, accounts payable, notes payable, contributed capital, sales revenue, cost of goods sold (expense), advertising expense, wage expense, and repair expense. All accounts begin with zero balances.
1. Record in the T-accounts the effects of each transaction for Audrey's shop in April, referencing each transaction in the accounts with the transaction letter. Show the ending balances in the T-accounts. Note that transactions (h) and (m) require two types of entries, one for sales and one for cost of goods sold. Prepare trial balances for 4/30/12.
1. Prepare financial statements at the end of the month ended April 30, 2012. Hint: Do the income statement first, followed by the statement of stockholders' equity, and then the balance sheet. Properly label each statement: Does it cover a period of time or just a point in time?
1. Write a short memo to Audrey offering your opinion on the results of operations during the first month of business.
1. After three years in business, you are being evaluated for a promotion. One measure is how efficiently you have managed the assets of the business. Using the data in the following table, compute the total asset turnover ratio for 2014 and 2013 and evaluate the results. Also compute the return on invested capital (net income divided by total stockholders' equity). Do you think you should be promoted? Why or why not?
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Audrey's Ice Cream Parlor: Financial Data |
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Account |
2014 |
2013 |
2012 |
|
Total assets |
$93,000 |
$78,000 |
$61,000 |
|
Total liabilities |
$23,000 |
$23,000 |
$16,500 |
|
Total contributed capital plus retained earnings |
$70,000 |
$55,000 |
$44,500 |
|
Total sales |
$100,000 |
$82,500 |
$57,250 |
|
Net income |
$15,000 |
$10,500 |
$4,500 |
