Week 6 Discussion and Participation Questions - Essay Example

1. The most common type of dividend is a cash dividend. When companies mention that dividend was paid everybody assumes that is a cash dividend. Financial ratio formulas such as the dividend payout ratio are structured for cash dividends. There is a second alternative for companies. The second alternative is to pay a stock dividend. A stock dividend pays the investor common stocks of the company instead of cash as dividend compensation. One of the negative aspects of stock dividends is that it dilutes the value of all the common stocks of the company because there are more stocks in the stock market and the intrinsic value of the company stayed the same. 2. I agree with you that the use of stock dividends can lower the value of the common stocks of a company.

I realize this phenomenon occurs, but is not as bad as people think. A common shareholder that receives a stock dividend might be hurt by the loss in value of his common stocks investment. The reason the overall effect is not that bad is because the shareholder will own more stocks of the company and the overall value of his investment should by higher after the stock dividend is paid out. 3. There are specific thresholds that must be met for a segment to be considered a reportable segment. The guidelines that must be met for a segment to be a reportable segment are illustrated in the list below. 1. “Reported revenue is at least 10 percent of combined revenue 2.

Reported profit (loss) is at least 10 percent of combined profit (loss) 3. Assets are 10 percent or more of combined assets” (Schroeder, Clark, Cathey, 2011, pg. 535). Schroeder, R.G., Clark, M.W., Cathey, J.M. (2011). Financial Accounting Theory and Analysis (10th ed.). New Jersey: John Wiley & Sons. 4. The temporal method of foreign exchange accounting was developed in 1972 by Lorenzen. The application of the temporal method is explained below: “Money and receivables and payables measured at the amounts promised should be translated at the foreign exchange rate in effect at the balance sheet date.

Assets and liabilities measured at money prices should be translated at the foreign exchange rate in effect at the dates to which the money prices pertain” (Schroeder, et. al., 2011, pg. 539). The inventory valuation under this method is based on lower of cost or market (LCM). Schroeder, R.G., Clark, M.W., Cathey, J.M. (2011). Financial Accounting Theory and Analysis (10th ed.). New Jersey: John Wiley & Sons. 5. Week six ended a tremendous accounting experience for me. The best exercise I performed during week six was the CPA exam review.

This was the second time during this course that I got a chance to take another study exam for the CPA. The thing I liked the most about the study exam simulation was the fact that the system would provide an explanation of the correct answer if the student gets it wrong. I noticed that doing 125 accounting exercises is very exhausting. Both times I took the practice exam it took me between 5.5 to 6 hours to complete all problems. The research I perform for the week 6 team paper was very informative. 6. An area of accounting that I like a lot is financial accounting.

The accounting cycle is the heart of accounting since the algorithm connects all economic activity into a process that summarizes the year’s financial results in the financial statements of the company. I like to analyze financial statements using ratio analysis. I have noticed that there are a lot of jobs available in financial accounting. I would like in the future to pursue a CMA certification. This certification is as valuable as the CPA. 7. I think that since you work in the military you could benefit a lot from a higher education in accounting.

The military has a very fair compensation system which rewards its employees for obtain a masters degree. There are lots of opportunities across the global military network for accountants. The military has a multi-billion dollar budget which means it needs a lot of accountants to record, track, and monitor all those financial transactions. 8. Non-profit organizations in the United States and abroad have become an important element of the economy since they generate millions of jobs. I think that non-profit accounting has a growing demand and people with special accounting skills will have lots of opportunities in this segment of the economy.

I agree with you that the last two courses of the specialization in accounting (auditing and forensic accounting) are extremely useful and practical.