Concept explainers
You recently received a letter from your Uncle Sammy. A portion of the letter is presented below.
You know that I have a significant amount of money I saved over the years. I am thinking about starting an investment program. I want to do the Investing myself, based on my own research and analysis of financial statements. I know that you are studying accounting, so I have a couple of questions for you. I have heard that different users of financial statements are interested in different characteristics of companies. Is this true and, if so, why? Also, some of my friends who are already investing haw told me that comparisons involving a company's financial data can be made on a number of different bases. Can you explain these bases to me?
Instructions
_____ Write a letter to your Uncle Sammy which answers his questions.
Trending nowThis is a popular solution!
Chapter 14 Solutions
Managerial Accounting: Tools for Business Decision Making
- Assume that you are nearing graduation and that you have applied for a job at a local bank. As part of the bank’s evaluation (interview) process, you have been asked to take an exam that covers several financial analysis techniques. The hiring decision depends on how you would answer the following questions: Part I: TVM Analysis. The first section of the test addresses time value money analysis.John andMaryareayoungcouple, who want to put their finance in order. Boththehusbandandthe wifeare27yearsagoandinstableemployment. They want to manage their savings and earnings to achieve a better return and reduce the risks. You want to help them with their financial planning by answering a series of questions as follows: ThegreatAlbertEinsteinoncesaid“Compoundinterestistheeighthwonderofthe world. He who understands it earns it...he who doesn't...pays it.” Whatisthefuture value of an initial $500 after 30 years if it is invested in an account paying 15 percent annual interest? What is the…arrow_forwardYour friends were excited to hear you have chosen accounting for a career. They have several practical questions regarding money and interest (time value of money). Please assist your friends by answering their respective questions.  For each question: Estimate without using a table, calculator, etc.  Document the “step-by-step” detail showing them how you solved the question.  NOTE: To solve use one of the following: EXCEL  Include all the detail steps for whichever tool you choose. For example, if using EXCEL show all formulas (copy so reader could duplicate your work). If using a business calculator, in detail in proper order show numbers and buttons you input to obtain your answer.  Provide a one to three sentence written explanation to your friend explaining the basic time value of money concept(s) impacting the solution.    Problems start with “Friend #1” at the top of page 2.arrow_forwardYour friends were excited to hear you have chosen accounting for a career. They have several practical questions regarding money and interest (time value of money). Please assist your friends by answering their respective questions.  For each question: Estimate without using a table, calculator, etc.  Document the “step-by-step” detail showing them how you solved the question.  NOTE: To solve use one of the following: EXCEL  Include all the detail steps for whichever tool you choose. For example, if using EXCEL show all formulas (copy so reader could duplicate your work). If using a business calculator, in detail in proper order show numbers and buttons you input to obtain your answer.  Provide a one to three sentence written explanation to your friend explaining the basic time value of money concept(s) impacting the solution.arrow_forward
- Please help with explaining how I can answer the following if I chose the role of an investor:  choose the role of an investor, creditor, taxpayer, or benefactor of one of the organizations they have presented. Referring to the information provided by your classmates related to the informational needs of the user group you have chosen, state whether the objectives of financial reporting they have listed meet your needs, whether any additional information is needed by your user group, and why this information would be beneficial to the financial decisions you would need to make. Are there any additional objectives that should be listed for your user group, if so what are they? How do your needs differ from the other user groups? The information is below: For both our initial discussion and my final project, GEB will be the nonprofit (NFP) organization I study along with Peekskill, NY as the local government. Both are in neighboring towns to my home base. Home Depot will be the…arrow_forwardCan you help with question, In a minimum of 175 words. Many of us apply the time value of money in our personal lives – for example, when we invest dollars in a young child’s bank account earmarked for his or her eventual college education. Share an explanation of the time value of money in your own words. What criteria do accountants use to decide whether to use present or future values in accounting statements?arrow_forwardYou are an accounting student at your local university. Your brother has recently managed to save $5,000, and he would like to invest some of this money in the stock market, so hes researching various global corporations that are listed on the stock exchange. He is reviewing a company that has Goodwill as an item on the balance sheet. He is quite perplexed about what this means, so he asks you for help, knowing that you are taking accounting classes. How would you explain the concept of goodwill to him by comparing it to other types of resources the company has available?arrow_forward
- Jorge Martinez is thinking about buyingan existing printing business and hasbeen carefully studying the records of thebusiness to get a good handle on its historicalfinancial performance. Jorge heardthat you are taking a class in entrepreneurshipand asks you, “What suggestionsdo you have for me to make the best use ofthis financial information (i.e., three yearsof audited income statements, balancesheets, and statements of cash flow)?”What suggestions would you give Jorge formaking the maximum use of the financialstatements?arrow_forwardBased on your analysis of the Lion Tire transactions, draft the journal entries that should have been made in an Excel spreadsheet. Then, write a memo to Andrew explaining the accounting principles that should have been followed for Panache's investment in Lion Tire. In your memo: Illustrate how the investment will be reported in the company's balance sheet and income statement. Summarize how and why the accounting for this investment is different from the accounting for Panache's other investment securities. Devise three ways, based on past practices, that Panache can improve its future accounting principles for the Lion Tire transactions. Use examples from the Excel spreadsheet when necessary.arrow_forwardYour friends were excited to hear you have chosen accounting for a career. They have several practical questions regarding money and interest (time value of money). Please assist your friends by answering their respective questions. Document the “step-by-step” detail showing them how you solved the question.  NOTE: To solve use one of the following: Include all the detail steps and formulas for EXCEL. Provide a one to three sentence written explanation to your friend explaining the basic time value of money concept(s) impacting the solution.arrow_forward
- Choose TWO of the following questions to discuss: In your opinion, what was the most important topic or subject you studied in this course? Explain your answer. What topic or subject did you struggle with most in this course? What did you find most surprising about this course? What did you learn in this course that you think will benefit you in your future studies or career path? This course completes your study of the foundations of accounting. After completing this course, what area of accounting are you interested in pursuing?arrow_forwardA friend asked you to reveal important financial information of the company, being a finance manager of the company what would you do? Justify by considering ethics in finance.arrow_forwardPlease help me with my Financial Management assignment. I already worked for it, just want to confirm from experts. I really appreciate any help you can provide. I want to know the solution and answer for Questions no. 2 and 3arrow_forward
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College