WHAT DO EACH OF THE FOUR FINANCIAL STATEMENTS TELL YOU ABOUT A COMPANY?

21 May WHAT DO EACH OF THE FOUR FINANCIAL STATEMENTS TELL YOU ABOUT A COMPANY?

Add to the benefits of accounting for that user or explain how reading your colleagues’

statements has modified your view of that user.

• What do each of the four financial statements tell you about a company? How do companies

use financial statements? Which financial statement do you think is the most useful and why?

Respond to your classmates’ postings by adding to what each financial statement reveals.

Then, comment on your classmates’ choice of the most important financial statements.

Provide a different opinion, modify your own, or further support an opinion and explain why.

Week 3 DQs:

• What would be the effect of removing either the Matching Principle or the Revenue

Recognition Principle from the process? Use a concrete example of how doing so might

affect accounting in a given period.

Respond to your classmates’ postings by commenting on what might happen, if expenses are

recognized over a period that is longer or shorter than that used for revenues.

• What is the difference between the cash basis of accounting and the accrual basis of

accounting? Which one would you select for a company that has inventory and why? Does

the size of the company make a difference? Explain how. What would be the advantages and

disadvantages of using one basis of accounting over the other?

Respond to your classmates by commenting on which basis of accounting might be best for a

large company with inventory and a small company with inventory. Also, comment on the

advantages of each basis of accounting.

Week 5 DQs:

• What are reversing entries and why are they required? What would happen if reversing

entries were not made? What transactions might require reversing entries? What transactions

might not require reversing entries?

Respond to your classmates’ postings by adding to their rationales for using or not using

reversing entries.

• After examining Illustration 4-5 on p. 151 of Financial Accounting, what do you consider might

happen if

o revenue accounts are not closed? Explain why.

o expense accounts are not closed? Explain why.

o dividends are not closed? Explain why.

Respond to your classmates’ postings by agreeing with, disagreeing with, or modifying their

speculations. Provide reasons for your opinions.

Week 7 DQs:

• Select three ratios, one from each category—liquidity, profitability, and solvency—you think

are the most important.

Why do you consider these ratios important? Which internal and external users might be

most interested in these ratios? Explain why.

Respond to postings of your classmates who selected different ratios than those you

selected. Comment on the significance of these ratios and which users might be most

interested in them.

• Review Illustrations 15-17 through 15-24 on pp. 710–714 of Financial Accounting.

Given the data, would you have invested in Quality Department Store in 2006? Explain why

or why not. Summarize your analysis of the financial data to support your reasoning. What

recommendations would you make to improve the financial health of this company? Explain

why.

Respond to your classmates’ postings, by agreeing or disagreeing with their assessments

while pointing to the data and specific ratio, vertical, or horizontal analyses.

Week 9 Capstone DQ

Review the annual reports for a S & P 500 company of your choosing. In your estimation, the company you chose may be financially healthy or weak.

Would you invest in this company? Explain why or why not. Justify your reasoning, by presenting at least three key financial ratios that analyze the profitability, the liquidity, or the solvency of the company.

Respond to your classmates’ postings, by agreeing or disagreeing with their assessments, while pointing to the data.

o Respond to at least one classmate who selected different ratios than those you selected or a different company to analyze.

o Comment on the significance of the ratios and your classmates’ conclusions.

· Use the same or other ratios to bolster your opinion.