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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
Medium
Medium
Sales skills
Medium
Medium
Low
(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
