Accounting Chapter 1 Homework Beginning Cash Balance Less Cash Payments

BYP 1-1 FINANCIAL REPORTING PROBLEM

(a) Apple’s total assets at September 28, 2013 were $207,000 million and

at September 29, 2012 were $176,064 million.

(d) Apple reports net sales for three consecutive years as follows:

2011 $108,249 million

(e) From 2012 to 2013, Apple’s net income decreased $4,696 million from

$41,733 million to $37,037 million.

BYP 1-2 COMPARATIVE ANALYSIS PROBLEM

(a)

(in millions)

PepsiCo

Coca-Cola

1.

Total assets

$77,478

$90,055

2.

Accounts receivable (net)

$6,954

$ 4,873

3.

Net sales

$66,415

$46,854

4.

Net income

$6,787

$ 8,626

(b) Coca-Cola’s total assets were approximately 16% greater than PepsiCo’s

total assets, but PepsiCo’s net sales were 42% greater than Coca-Cola’s

net sales. PepsiCo’s accounts receivable were 42% greater than Coca-

Cola’s and represent 10% of its net sales. Coca-Cola’s accounts

Coca-Cola’s operations significantly more profitable.

BYP 1-3 COMPARATIVE ANALYSIS PROBLEM

(a)

(in millions)

Amazon

Wal-Mart

1.

Total assets

$40,159

$204,751

2.

Accounts receivable (net)

$4,767

$6,677

(b) Wal–Mart’s total assets were approximately 510% greater than Amazon’s

total assets, and Wal-Mart’s net sales were over 7 times greater than

Amazon’s net sales. Wal-Mart’s accounts receivable were 140% greater

than Amazon’s and represent 1% of its net sales. Amazon’s accounts

BYP 1-4 REAL-WORLD FOCUS

(a) The field is normally divided into three broad areas: auditing, financial/

tax, and management accounting.

(b) The skills required in these areas:

(c) The skills required in these areas differ as follows:

Auditing

Financial

and Tax

Management

Accounting

People skills

Medium

Sales skills

Medium

Low

Communication skills

Medium

High

Analytical skills

High

Very High

High

Ability to synthesize

Medium

Low

High

Creative ability

Low

Medium

Initiative

Medium

Computer skills

High

Very High

(d) Some key job options in accounting:

Audit: Work in audit involves checking accounting ledgers and

financial statements within corporations and government. This work

is becoming increasingly computerized and can rely on sophisticated

random sampling methods. Audit is the bread–and-butter work of

BYP 1-4 (Continued)

Financial: Financial accountants prepare financial statements based on

general ledgers and participate in important financial decisions involving

mergers and acquisitions, benefits/ERISA planning, and long-term finan-

Management Accounting: Management accountants work in companies

and participate in decisions about capital budgeting and line of busi–

ness analysis. Major functions include cost analysis, analysis of new

contracts, and participation in efforts to control expenses efficiently.

This work often involves the analysis of the structure of organizations.

Is responsibility to spend money in a company at the right level of our

organization? Are goals and objectives to control costs being communi–

Tax: Tax accountants prepare corporate and personal income tax state-

ments and formulate tax strategies involving issues such as financial

choice, how to best treat a merger or acquisition, deferral of taxes,

(e) Junior Staff Accountant $40,000-$80,000

BYP 1-5 DECISION MAKING ACROSS THE ORGANIZATION

(a) The estimate of the $6,100 loss was based on the difference between

(b) The balance sheet at March 31 is as follows:

CHIP-SHOT DRIVING RANGE

Balance Sheet

March 31, 2017

Assets

Cash …………………………………………………………………………….. $18,900

Buildings ……………………………………………………………………… 8,000

Equipment ……………………………………………………………………. 800

Total assets …………………………………………………………… $27,700

Liabilities and Owner’s Equity

Liabilities

Accounts payable ($100 + $120) ……………………………… $ 220

Owner’s equity

BYP 1-5 (Continued)

(c) Actual net income for March can be determined by adding owner’s

drawings to the change in owner’s capital during the month as shown

below:

Owner’s capital, March 31, per balance sheet …………………. $27,480

(d) Revenues earned can be determined by adding expenses incurred

during the month to net income. March expenses were Rent, $1,000;

Wages, $400; Advertising, $750; and Utilities, $120 for a total of

$2,270. Revenues earned, therefore, were $5,750 ($2,270 + $3,480).

Alternatively, since all revenues are received in cash, revenues earned

can be computed from an analysis of the changes in cash as follows:

Beginning cash balance …………………………………. $25,000

Less: Cash payments

Caddy shack ………………………………….. $8,000

BYP 1-6 COMMUNICATION ACTIVITY

To: Sandi Alcon

From: Student

I have received the balance sheet of New York Company as of December 31,

2017. A number of items in this balance sheet are not properly reported.

They are:

1. The balance sheet should be dated as of a specific date, not for a period

of time. Therefore, it should be dated “December 31, 2017.”

2. Equipment should be shown as an asset and reported below Supplies

on the balance sheet.

BYP 1-6 (Continued)

A correct balance sheet is as follows:

NEW YORK COMPANY

Balance Sheet

December 31, 2017

Assets

Cash …………………………..………………………………………………………. $ 9,000

Accounts receivable …………………………………………………………….. 6,000

Liabilities and Owner’s Equity

Liabilities

Notes payable ………………………………………………………………. $10,500

Accounts payable …………………………………………………………. 8,000

Total liabilities ……………………………………………………….. 18,500

Owner’s equity

BYP 1-7 ETHICS CASE

(a) The students should identify all of the stakeholders in the case; that is,

all the parties that are affected, either beneficially or negatively, by the

action or decision described in the case. The list of stakeholders in this

case are:

(b) The students should identify the ethical issues, dilemmas, or other con-

siderations pertinent to the situation described in the case. In this case

the ethical issues are:

 Is it proper that Travis charged both firms for the total travel costs

rather than split the actual amount of $296 between the two firms?

(c) Each student must answer the question for himself/herself. Would you

want to start your first job having deceived your employer before your

first day of work? Would you be embarrassed if either firm found out

BYP 1-8 ALL ABOUT YOU

(a) Answers to the following will vary depending on students’ opinions.

(1) This does not represent the hiding of assets, but rather a choice

as to the order of use of assets. This would seem to be ethical.

(2) This does not represent the hiding of assets, but rather is a change

in the nature of assets. Since the expenditure was necessary,

although perhaps accelerated, it would seem to be ethical.

(b) Companies might want to overstate net income in order to potentially

increase the stock price by improving investors’ perceptions of the

(c) Sometimes companies want to report a lower income if they are nego–

tiating with employees. For example, professional sports teams fre–

quently argue that they can not increase salaries because they aren’t

(d) Unfortunately many times people who are otherwise very ethical will

make unethical decisions regarding financial reporting. They might be

driven to do this because of greed. Frequently it is because their

superiors have put pressure on them to take an unethical action, and

BYP 1-9 FASB CODIFICATION ACTIVITY

No solution necessary

BYP1-10 CONSIDERING PEOPLE, PLANET, AND PROFIT

(a) The 5 aspirations relate to the company’s goals related to sustaining

its business, its brands, its people, its community and the planet.

(b) i. Support sustainable food and agriculture: Purchased 170 million

pounds of organic ingredients since the company’s inception.

IFRS EXERCISES

IFRS1-1

The International Accounting Standards Board, IASB, and the Financial

Accounting Standards Board, FASB, are two key players in developing inter-

national accounting standards. The IASB releases international standards

IFRS1–2

IFRS1-3 INTERNATIONAL FINANCIAL REPORTING PROBLEM

(a) Ernst & Younget Autres; Deloitte & Associes