The Possibility of Lending Money and Accounting - Essay Example

I would need to see the financial statements of the company, the annual report and corporate responsibility report, and its code of ethics.
d) The reason the company paid dividends was to reassure the shareholders that the company can still operate profitably.
2. a) The total amount of current assets of Tootsie Corporation in 2004 and 2003 were $192,693,000 and $243705,000.
b) They are in the proper order. The assets in a balance sheet are supposed to be listed in sequence according to the liquidity of the asset. Cash is the most liquid asset.
c) They are classified as Net, Property, Plant, and Equipment.

d) The current liabilities of the company in 2004 and 2003 are $82,317,000 and $62,887,000 respectively
3. a) Not having any long-term debt gives a company a chance to invest in projects to make a firm grow. A company that has low long-term debt can obtain cheaper prices as far as interest rates from lenders. The disadvantage is that the company is leading idle potential opportunities to grow.
c) A large cash balance allows a company to obtain interest revenue. A large cash fund gives firm stability and reduces business risk. A disadvantage is the cost of opportunity of using that cash asset on some other projects that can generate a larger return on investment.
d) The company may have a large number of accounts payable because it has built strong relationships with its suppliers and they receive credit terms longer than the industry standard of n/30.

4. a) items that can cause pre-payments are prepaid supplies, prepaid rent, and prepaid wages.
b) Items that can cause accruals are interest expense, and accrued commission payable, among others.
c) The amount of depreciation expense between 2003 and 2004 was $37,770,000.
d) Cash paid to cover income taxes should be deducted from the balance sheet.
5. a) The gross margin of Carrefour is 22.49%, while the gross margin of Wal-Mart is 22.46%. The difference is insignificant.
b) The net margin of Carrefour is 2.46%, while Wal-Mart’s is 3.53%.

c). Looking forward it seems Wal-Mart has better chances because it has a competitive cost advantage that makes the firm more profitable.
6. The change in methodology from FIFO to average inventory created a price that is more realistic and better adjusted to market changes. The effects in the accounting books of such a change could be either an understatement or an overstatement of the inventory total.
7. a) The mission of the FASB is to establish and improve standards of financial accounting and reporting for the guidance and education of the public including issuers, auditors, and users of financial information (Fasb, 2009).

b) It has to be a process involving a review board before being accepted.
c) The procurement plan utilizes a framework of the following factors: pervasive of the issue, alternative solutions, technical feasibility, practical consequence, convergence possibilities, cooperative opportunities, and resources.

8 a) 10.83
b) 0.09
9. a) The value of property, plant, and equipment in 2004 was $244,367,000.
b) I could not determine the method utilized, the most common method utilized in the industry is the straight-line method.
c) Straight line
d) $37,670,000
e) Utilizing the amortization method.
f) Yes it does. A lease hides the fact that a liability exists. Read More