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Comparative Analysis — BTN 1-2
($ millions) Apple Google
1. Total assets =
3. Revenues-Expenses
$170,910- Expenses
$59,825 – Expenses
4. Analysis of return on assets: Apple’s 19.3% return is good given the
5. Analysis conclusions: Google’s return is adequate (better when compared
to the industry norm); Apple’s return is arguably very good. Both
companies’ expenses are a large percentage of their revenues.
Ethics Challenge — BTN 1-3
1. There are several parties affected. They include the users of financial
statements such as shareholders, lenders, investors, analysts, suppliers,
2. A major factor in the value of an auditor's report is the auditor's
3. Thorne should not accept this fee arrangement. To avoid compromising
the auditor's independence, Thorne should reject it. (Further, the AICPA
4. Ethical considerations guiding this decision include the potential harm to
Communicating in Practice — BTN 1-4
1. Deciding whether Apple is a good loan risk can be difficult because the
planned expansion is risky if customer demand does not meet
1. How the company is organized is important to a loan officer. If it is a
standard partnership (which it was, and not a LLC), the personal assets of
the owners are available to repay the loan. In this case, a loan officer will
Taking It to the Net — BTN 1-5
(in thousands) 2013 2012 2011 2010 2009
1. Rocky Mountain Chocolate Factory’s (RMCF) revenues declined slightly
2. Net income performance for RMCF decreased from 2008 through 2010.
However, income increased in 2011 over 2010. Nevertheless, income
higher profitability levels.
Teamwork in Action — BTN 1-6
Suggestions for forming support/learning teams are in the Instructor’s
Resource Manual (IRM). The IRM provides the master of a Student Data
Form that can be duplicated and used to gather information as a basis for
forming these teams. The IRM also includes other administrative materials
helpful in creating an active learning environment for studying accounting.
[Note: Instructors often have students use the copy function in e-mail to keep
them advised of meeting times and other important team activities. This also
encourages students to use and explore additional features of e-mail.]
Entrepreneurial Decision — BTN 1-7
1. (a) AccountApp’s total amount of liabilities and equity consists of the
bank loan and the owner investments. Specifically:
Total assets = Bank Loan + Owner investment
= Liabilities + Equity
(b) AccountApp’s total amount of assets equals its total amount of
Hitting the Road — BTN 1-8
Check each student’s report for the following content:
1. (a) Identification of the form of business organization for the business
2. Identification of the reasons why the owner(s) chose this particular
form of business organization.
3. Identification of advantages or disadvantages of the form of business
organization chosen.
[Note: Many instructors have students complete this assignment in teams.]
Global Decision — BTN 1-9
1. Samsung’s net income and revenues figures are computed using
Korean Won (KRW), which is the currency of Korea. In contrast, Apple
Moreover, Samsung’s figures are computed according to International
2. Samsung’s return on assets ratio eliminates differences in monetary
units (between KRW and dollars). Consequently, we need not focus on
However, any comparisons using the return on assets ratio are still
