Complete The Week 5 Assignment

Complete The Following Week 5 Assignment In

Analyze various financial transactions and prepare financial statements and ratio analyses based on provided data; identify internal control weaknesses in cash handling procedures.

Paper For Above instruction

Week 5 assignment encompasses a comprehensive set of accounting and financial analysis tasks, which require a thorough understanding of cash flow classifications, financial statement preparation, ratio analysis, and internal control principles. Each task is designed to strengthen the application of foundational accounting concepts and the interpretation of financial data in real-world scenarios.

First, the assignment begins with the classification of transactions for Putnam Corporation. This task tests the ability to distinguish between operating, investing, financing, and non-cash investing and financing activities. For example, purchasing a machine with a long-term note exemplifies a non-cash investing and financing activity, while issuing stock for cash is a financing activity. Sale of investments and collection of accounts receivable are investing and operating activities, respectively. Correct classification is crucial for the preparation of cash flow statements under the indirect method.

Next, students are tasked with preparing a statement of cash flows for Schmitt Company using the indirect method. This involves adjusting net income for changes in working capital, non-cash expenses like depreciation, and other operational adjustments. Additionally, computing liquidity ratios such as current cash debt coverage and cash debt coverage provides insights into the company’s liquidity and debt-paying ability. Accurate computation of these ratios relies on understanding the components of cash flows and the relationship between cash and debt management.

Further, the assignment includes preparing a horizontal analysis of Spangles Inc.'s balance sheets. Horizontal analysis measures the percentage change from the base year (2013) to the comparison year (2014) across assets, liabilities, and equity. This analysis highlights trends in financial position, indicating whether the company's assets and liabilities have grown or shrunk, and by what percentage, thus aiding in assessing financial health and operational performance over time.

Subsequently, students are required to perform a vertical analysis of Jacobs Corporation’s income statements. Vertical analysis expresses each item as a percentage of sales revenue, facilitating comparability over different periods and among companies of varying sizes. It helps identify cost structure and profit margin trends, which are vital for effective managerial decision-making and competitive analysis.

The assignment also involves preparing a statement of comprehensive income for Ling Company, incorporating unrealized gains on non-trading securities. This task emphasizes understanding of other comprehensive income components and the one-statement approach, illustrating how comprehensive income encompasses net income and other gains/losses not recognized in net income but impacting shareholders’ equity.

Further, students analyze financial data of Odgers Inc. to prepare both indirect and direct method statement of cash flows. These exercises underscore the nuances between cash flow reporting methods and the impact of investing activities, such as purchasing and selling plant assets and paying off bonds, on overall cash movements. Proper classification and calculation are essential for transparent financial reporting and cash management.

Similarly, the task of computing various ratios, such as earnings per share, return on equity, return on assets, and liquidity ratios, enhances understanding of financial performance metrics. These ratios are crucial for investors, analysts, and managers to evaluate profitability, efficiency, and financial stability.

The final component focuses on internal control weaknesses in cash receipt procedures at Kelton Company. Students are asked to identify control violations such as inadequate segregation of duties, poor storage of cash, and flawed reconciliation processes, and to recommend principles of internal control that are compromised. Understanding these weaknesses helps in designing effective controls to prevent theft, errors, and fraud, thereby safeguarding company assets.

Throughout these tasks, integrating theoretical knowledge with practical applications fosters a holistic understanding of financial operations, reporting standards, and internal controls. Mastery of these skills is essential for accounting professionals, auditors, and financial managers aiming to produce accurate financial statements, evaluate financial health, and implement effective control environments in organizations.

References

  • Brigham, E. F., & Houston, J. F. (2019). Fundamentals of Financial Management (15th ed.). Cengage Learning.
  • Healy, P. M., & Palepu, K. G. (2012). Business Analysis & Valuation: Using Financial Statements (5th ed.). Cengage Learning.
  • Wild, J. J., Subramanyam, K. R., & Halsey, R. F. (2020). Financial Statement Analysis (12th ed.). McGraw-Hill Education.
  • Stone, M. (2020). Guide to Financial Ratio Analysis. Journal of Accountancy.
  • Stickney, C. P., Brown, P., & Wahlen, J. (2019). Financial Reporting, Financial Statement Analysis, and Valuation (9th ed.). Cengage Learning.
  • Financial Accounting Standards Board (FASB). (2023). Accounting Standards Codification (ASC). Retrieved from https://asc.fasb.org
  • International Financial Reporting Standards (IFRS). (2023). IFRS 13 Fair Value Measurement. IFRS Foundation.
  • Horngren, C. T., Sundem, G. L., & Elliott, J. A. (2018). Introduction to Financial Accounting (11th ed.). Pearson.
  • Schroeder, R. G., Clark, M. W., & Cathey, J. M. (2019). Financial Accounting Theory and Analysis (12th ed.). Wiley.
  • Arens, A. A., Elder, R. J., & Beasley, M. S. (2019). Auditing and Assurance Services (16th ed.). Pearson.

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