Balance Sheet Essays


Autodine Restaurants Business Plan

revenue recognition and accounting of leases when the company seeks to expand. Pro forma Income Statement and balance sheet The following section outlines the Pro Forma Income Statement and balance sheet of Autodine Restaurant for the 2016, 2017 and 2018 financial years. Internal Controls An internal control system (IC) is a system of checks and balances, and policies and procedures structured to protect assets, guarantee reliable financial reporting, ensure efficient and effective operations, and make certain compliance with rules and regulations. One of the elements of the COSO Framework includes the control procedures which are the activities undertaken by the… Continue Reading...

Different but Related Accounting Scenarios

revenues puts this figure in the billions (Perry, 2015). Short Essay Introduction When considering an income statement and balance sheet, there are multiple moving parts that need to be considered and pondered. The different factors that can be important (if not vital) include fixed costs, variable costs, tax rates, volume of sales, the amount of overhead and fixed costs, the margin between variable costs and prices for goods sold and so forth all matter. However, they can matter to different degrees in different situations. Questions Answered Why do many organizations make the effort to prepare a different type of income statement for… Continue Reading...

Apple Investment and Financial Analysis

Apple Inc. Investment Analysis and Recommendations Apple Inc. is an American multinational company specializing in designing and producing mobile telecommunication devices that include iPhone, computer software and hardware, Apple TV, Apple Watch, iPod, and other electronic devices. Apple was incorporated and publicly registered in 1977. Headquartered in California, Apple is one of the most successful American companies in term of revenue with the annual revenue reaching $233.7 billion at the end of 2015 fiscal year. On February 2016, Apple recorded $521.3 billion worth of market capitalization. While Apple designs the bulk of their products in the United States, the company's… Continue Reading...

Auditors Regulatory Oversight

In recent times, there have been accounting scandals that have stunned the finance and accounting realm, and thereby reemphasized the significance of maintaining proper accounting practices. The recent accounting scandal of Olympus Corporation, a Japanese manufacturing company for cameras and endoscopes is selected for this study. The company's scandal encompassed a 13-year period of accounting irregularities totaling almost $1.7 billion (Infinit Accounting, 2014). Audit Report Issued by CPA Firm When Michael C. Woodford was appointed as president and Chief Executive Officer (CEO) of Olympus Corporation, he endeavored to make certain that the financial statements of the company were accurate and… Continue Reading...

Factors That Led to Enron Downfall in 2001

in their financial transactions. While the company was able to design their transaction to follow these rules, the company balance sheet did not reflect its financial risks. The FASB ("Financial Accounting Standards Board") is an accounting governing body that oversees the accounting standards, however, Enron did not follow the laid down rules and regulation in the financial reporting. Moreover, Moncarz, Moncarz, Cabello, et al. (2006) believed that deregulation of the energy market affected Enron business transactions because the deregulation lowered the prices of gas and increased the supply of gas leading to the volatility in gas prices. Thus, the… Continue Reading...

Accounting for a Lease

lessee would recognize lease assets and liabilities on the balance sheet. • Other leases are classified as operating leases (for example, a lease of office space for 10 years) whereby the lessee would not recognize lease assets or liabilities on the balance sheet. The SEC and a number of other studies have all concluded that much of the reporting conducted with leased items occurs off-balance sheet in a way that is detrimental to the transparency and the representation of assets to investors. To improve transparency, the FASB has rewritten much of the reporting requirements about leases and breaks down… Continue Reading...

Audit Planning Control at Home Depot

home. In order to perform an audit on Home Depot, the income statement and balance sheet are merely a starting point. On the income statement, the receipts are important to determine of the revenues are correct. Testing the point of sale software is critical to this process. Home Depot probably uses a system that delivers sales to ledgers in real time, or overnight at worst. An audit would make sure that this system works as intended, that there are backups against which the data can be verified, and that any downtime the company might have experienced will also be… Continue Reading...

Quantitative Easing

easing will continue having an effect on the U.S. Economy until the Fed shrinks its balance sheet by the amount of interest that it obtains (Burnham, 2014). What are the currency implications when it is implemented? When Quantitative Easing is implemented with the main purpose of stimulating the domestic economy, the measures of monetary policy have an indirect impact on the exchange rate, which in turn causes the currency to decline. QE causes the currency to weaken as it makes the exports to become comparatively cheaper and therefore stimulates the economy (Johnston, 2015). In fact, quantitative easing can be… Continue Reading...

The Greatest Ponzi Scheme

Madoff Securities case occurred because of fraudulent investment schemes due to lack of regulation as well as insufficient oversight of specific financial intermediaries along with dismissal of opportunistic behavior. To understand why such an incident happened in the first place, it is important to identify the kind of scheme led by Madoff. It is called a Ponzi scheme. In a Ponzi scheme, an unsustainably big pool of investors must be maintained to keep it afloat. It begins with a simple promise to a few investors of doubling an amount they decided to invest. Rather than investing that money and doubling… Continue Reading...

Bonnesante S.a. Case Study

lessee is not required to recognize the asset being leased in the balance sheet. However, in August 2010, an Exposure Draft was issued by the IASB, which encompassed revising different changes to the IAS 17 (Hawkins, 2010). In general, the net result of the exposure draft was that lessees would be required to recognize a right to use asset together with a lease liability with respect to Lease Interest for all of their short-term leases and also long-term leases reported in the balance sheet. In contrast, there would be an amortization of the right to use asset against the… Continue Reading...

Starbucks Financial Statement Analysis

that the net earnings ended up growing faster in 2014 than they did in 2012. On the balance sheet, the horizontal analysis says the following: balance sheet Current Assets 2013 2014 Cash 66.3% ST Investments 20.6% A/R Inventories 98.2% Prepaid Exp 99.3% Deferred Taxes Current Assets 76.2% LT Investments 58.3 Equity and cost inv PPE Deferred Taxes 93.4% Other Other intangible 99.5% Goodwill 99.2% Total Assets 11516.7 10752.9 93.4% #DIV/0! Current Liabilities A/P #REF! Accrued litigation 0 0.0% Accrued liabilities Insurance reserves Deferred Revenue Total C. L. 56.5% LT debt 2048.3 Other LT Liabilities Total Liabilities 77.9% Shareholders' Equity 87.5%… Continue Reading...

Introduction to Global Business

financial statements reported by a company include the income statement, balance sheet, statement of retained earnings and statement of cash flows. Globally, there are two sets of accounting standards, the Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). IFRS are regarded as being more principles-based and U.S. GAAP as being more rules-based. The establishments responsible for setting the IFRS and GAAP are the International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB), respectively. Auditing encompasses making certain that the internal control structure of an organization is operating efficaciously. This is to make certain that… Continue Reading...

Tax Advice Benefit

deferring such amounts to the capital gains in the balance sheet of the company and therefore benefiting ABC Corporation. Tax avoidance is permitted by section 368 of the law by the Internal Revenue Services (IRS) and facilitates the company to offload the tax in a legal manner. In addition, it is imperative to point out that ABC Corporation to considerably benefit from type B reorganization for the reason that this approach is a cash free kind of enhancement, and which is well-matched for tax avoidance. In particular, by selecting this particular approach, the acquirer would have the capacity to… Continue Reading...

Cash and Accrual Basis Accounting

issuing its financial statements. Every adjusting entry would affect one balance sheet account and one income statement account. There are two likely scenarios that would necessitate the use of adjusting entries in a company's financial statements. The first is when there has not been any record made for revenues and expenses that have already occurred, and these should be included in the current balance sheet and income statement. The second is when a record has already been entered in the company's accounting records, but the entered amount should be divided into two or more accounting periods. References Diamond, J.… Continue Reading...

Financial Accounting Vs. Managerial Accounting

Financial Accounting Financial accounting is mainly concerned with the financial statements that are given to the stockholders, lenders, financial analysts as well as other important factions outside the company. The accounting principles come hand in hand with financial accounting since they are used in reporting the results of the corporation's past transactions. These transactions are reported on balance sheets, the statement of changes, the statement of cash flow, and the income statement. Financial accounting is mainly used as a representation of the financial health of an organization to the stakeholders. The audience of financial accounting includes board of directors, financial… Continue Reading...

Horizontal and Vertical Analysis

Accounting Vertical Analysis balance sheet Ratio Analysis Current Ratio Cash Ratio X Interest Earned Debt/Equity Gross Margin Operating Margin Net Margin There are several relationships that might be worth investigating further. One issue that arises is with the lack of cash on hand, despite high debt. The current ratio is acceptable, but it is all in accounts receivable, which presumably comes from these attornies. But the joint venture information has not been provided, and that is where the most significant issues lie. The joint venture information… Continue Reading...

Accounting Gaap and Ifrs

management and control of operations. The financial statements reported by a company include the income statement, balance sheet, statement of retained earnings and statement of cash flows. Globally, there are two sets of accounting standards, the Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). In particular, the GAAP are more often than not employed in the United States whereas IFRS are more often than not employed in Europe and international expanses. IFRS are regarded as being more principles-based and U.S. GAAP as being more rules-based. The establishments responsible for setting the IFRS and GAAP are the… Continue Reading...

Us Airways and American Airlines Merger Essay

doing on its own. The new airline has a better balance sheet, too, with a current ratio of 1.7 and a long-term debt to equity ratio of 8.0. American earned a 6.7% return on assets in 2014, which is higher than the industry average and doubled its income per employee (MSN Moneycentral, 2015). Conclusion The merger between American Airlines and US Airways was predictable, the only real sticking point being the timing, because of the challenges associated with the American Airlines bankruptcy. That company's owners were its creditors, and they needed to extract value from what was a declining… Continue Reading...

Tesla Motors Accounting Policies

cost, that this is how those goods should be reflected on the balance sheet. Again, this policy probably does not matter that much to Tesla, given its inventory throughput and the high resale value of its vehicles. However, for an automotive company that sells direct to consumers, this policy could have some interesting impacts down the road if Tesla ever hits a point where it is carrying a significant finished goods inventory. The company also needs to conduct inventory reviews in order to determine what inventory it is holding, but also what the market value of that inventory is.… Continue Reading...

The Role Of Sarbanes Oxley Act in Curbing Corporate Fraud

without bias and maintain a strong control system. Balance Account and balance sheet Reconciliations Tesco failed at reconciling the balance accounts and balance sheets accurately. The company was under immense pressure to keep performing better and did not consider including proper auditing, as they knew their move would not pass muster with strict auditors. Tesco did not execute its financial reporting as per the established accounting principles regarding valuation, measurement, obligation, occurrence, existence, and completeness. Supervisory Controls and Governance During the proceedings, one of the executives stated that the financial misrepresentation had been going on for so long since Tesco… Continue Reading...

Probability Of Inflation or Deflation

the Economy. Retrieved October 10, 2017, from https://www.thebalance.com/inflation-impact-on-economy-3306102 BISC. (2017, April 23). The Fed and the balance sheet: Shrinking the Giant. Retrieved October 10, 2017, from http://www.bsic.it/fed-balance-sheet-shrinking-giant/ Foundational Research. (2014, November 27). Inflation or Deflation: What is Next for the United States? Retrieved October 10, 2017, from https://seekingalpha.com/article/2715525-inflation-or-deflation-what-is-next-for-the-united-states?page=2 Krugman, P. (2009, May 3). Falling Wage Syndrome. The New York Times. Retrieved October 10, 2017, from http://www.nytimes.com/2009/05/04/opinion/04krugman.html?_r=1 Meltzer, A.H. (2009, May 3). Inflation Nation. The New York Times. Retrieved October 10, 2017, from http://www.nytimes.com/2009/05/04/opinion/04meltzer.html Patton, M. (2013, July 1). Inflation or Deflation: Which is the Greatest Risk? Forbes. Retrieved October 10,… Continue Reading...

Federal Reserve and Interest Rates

in any way (Lodge, 2011). The real issues are what the Fed intends to do with rates and its balance sheet—that’s what the market cares about. The Fed attempted to stimulate the economy with its unconventional monetary policy known as QE—quantitative easing—from 2008 to 2013. It has not been alone in this process: other central banks around the world have joined in and are still purchasing bonds to “stimulate” the obviously fragile economies of the world. The BOJ has a balance sheet that represents a deluge should it stop buying and start trying to unwind its portfolio (like the… Continue Reading...

Enron Fraud

purpose vehicles to hide debt and other toxic assets off the balance sheet. Thus, Enron misrepresented its debt and its bad assets on the balance sheet. It did this by exchanging its stock with the SPV for a note, and the stock would then be used to hedge an asset listed on the balance sheet. Enron guaranteed the SPV’s value. This worked fine as long as Enron’s stock kept rising, which it did during this boom (Investopedia, 2017). Enron also failed to disclose the apparent conflict of interest that was built into this structure. The mutual guarantees basically meant… Continue Reading...

Macroeconomic Indicators

are set to continue to rise as the central bank reduces its balance sheet. With bond yields already going up and volatility at all-time lows, questions remain about how the market will react to this normalization process. One thing is for certain, however: the recent rise of prices across several asset classes has coincided with the years of QE beginning in 2008. Home prices have soared, bond prices have soared, equity prices have soared, college tuition has soared, and even precious metals have soared (along with cryptocurrencies in recent months). While some commentators are alleging that we are now… Continue Reading...

Oil Crises Term in West Africa

Introduction In the contemporary, the world is experiencing an oil crisis. For almost three years now, the oil price has declined by more than 40 percent since 2014. At that point in time, the price of a barrel stood at $115, considerably deteriorating as it presently stands at $50. The oil price is comparatively determined by actual supply and demand and relatively by expectation. In particular, demand for oil is closely associated to economic activity whereas supply can be influenced by different aspects such as geo-political issues and also regional weather. Notably, if oil producers have the perception that price… Continue Reading...

Tim's Coffee Shop Business Simulation

and impact on Tim’s business. Use your accounting and finance knowledge to interpret the balance sheet and the Profit & Loss statement. Explain what Tim should do based on your understanding of the financial picture. Problem Solving/Recommendations Summary Give five recommendations on what Tim’s Coffee Shoppe can do to improve their business. References Associates Capstone in Management. (2012). Retrieved from Tim's Coffee Shoppe simulation: http://extmedia.kaplan.edu/business/Media/AB299/Tims_Coffee_Shop/index.htm Contents Executive Summary 2 Regulations and Management 2 Summary 2 Action Items 3 HR Analysis 3 Summary 3 Action Items 4 Marketing Analysis 4 Summary 4 Action Items 5 Strengths: 5 Weaknesses: 5 Opportunities:… Continue Reading...

Apple Finance Department

the money is taken out of the country and converted. Apple has a lot of money on its balance sheet, a result of being so profitable. Some of this money is sent to shareholders in the form of dividends. The choice of whether to pay dividends or to reinvest the money is one of the things that the finance team has to advise senior management about. The finance team would evaluate the different projects available to Apple, and compare the potential returns of those projects with the potential returns that it can win from simple using that money to pay… Continue Reading...

Tesla and the Porter Forces

are virtually on his heels and they have none of the balance sheet problems and debt issues that Tesla is facing. The competitive environment is heating up and Tesla needs to up its strategy in order to meet the oncoming obstacles and threats that are sure to spell a problem for the company. According to Porter’s Five Forces of Competition model, the Threat of New Entry, Buyer Power, Threat of Substitution, Supplier Power, and Competitive Rivalry are the five forces that impact a business. In the case of Tesla, these five forces can be assessed easily: new entry is… Continue Reading...

Starbucks Ratio Analysis

Norton (2012) point out, investors are more excited by equity than debt in the balance sheet. In the authors’ own words, “debt, and its interest charges, make up a fixed obligation that must be repaid in a finite period of time” (Porter and Norton, 2012, p. 526). Equity, however, does not have to be paid off. For the years ended 1st October 2017 and 2nd October 2017, Starbucks’ debt to equity ratio was 1.63 and 1.43 respectively (appendix 2). The debt to equity ratio in this case indicates that Starbucks has been taking on more debt in relation to… Continue Reading...

Health Information Technology Benefits

has cash flow (Bergin et al., 2013). The impact of all this on the balance sheet is that the organization will have to be able to sustain operations while implementing new projects so that the balance sheet does not become overweight. 4 The difference between a stakeholder and a stockholder is that a stakeholder can be anyone who is touched by the organization or its services, either directly or indirectly. These can include patients, administrators, members of the community where the organization is based, employees, care providers, insurers, legislators and so on. Stockholders own a piece of the organization… Continue Reading...

Cash Basis Vs. Accrual Accounting

reported in accrual accounting as having been purchased. The cash goes down but the balance sheet shows prepaid insurance as an asset as well, so there is a slight distortion there in that the value of assets doesn\\'t change, when via cash basis it would have because of the decrease in cash. The delayed wage payments are a current liability on the balance sheet in accrual accounting, and but would not show on the income statement yet. This transaction also wouldn\\'t show on cash basis either, but the reality is that it should be recorded as an expense. It… Continue Reading...

Mohamed Talaat Pasha Harb Contributions to Egypt’s National Development and Banking System

an innovative strategy of allocating BANQUE MISR’s partial yearly profits (those funds earmarked, within the company’s balance sheet, for establishing or developing Egyptian trading and industrial companies) towards the capitals of organizations for enabling control of their policies. Meanwhile, the remaining capital was offered to the public. Mohamed Talaat Pasha Harb’s BANQUE MISR was no ordinary commercial banking organization. To its founders, the company represented a means of collecting citizens’ savings and wisely investing them in the establishment of Egyptian organizations that were then able to manufacture affordably- priced, superior- quality products to meet all the myriad needs of… Continue Reading...

Leadership and the Issue Of Ethics

dollars worth in order to calm the markets and get the financial system rolling again. The Fed expanded its balance sheet exponentially and blew asset bubbles across all classes—equities, precious metals, housing, credit, etc. (Huston & Spencer, 2018). It was, in other words, the end of the free market: ever since, it has been nothing but a command economy with the only thing traders worrying about is whether the Fed is going to shrink its balance sheet or continue to be the buyer of last resort. Because so much of the modern economic system is dependent upon return-on-investment (ROI),… Continue Reading...

Fraud and Accounting Balance Sheets

importance of notes to consolidated balance sheets and statements of operations. Although most of the entries on a balance sheet will be in numerical form, consolidation on the balance sheet can be useful for contextualizing information. It is possible to distinguish between current and fixed assets and liabilities. These financial elements are in a constant state of flux. For example, current assets take the form of cash or assets which can be easily converted to cash such as inventory (McCrie, 2016, p.253). As a result, they can be used to purchase fixed assets such as new factories, equipment, and machinery.… Continue Reading...