Chapter 3, Problem 3.7BYP

(1)

To determine

Balance sheet:

 This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholders’ equity) over those resources. The resources of the company are assets which include money contributed by stockholders and creditors. Hence, the components of balance sheet are assets, liabilities and shareholders’ equity.

Financial Disclosures:

Financial disclosure refer to all material, significant and relevant information concerning the reporting organization that are essential to understand the financial statements of the organization in its entirety and help evaluating the performance and the financial health of the said organization. They are either provided on the face of the financial statement or as notes to the financial statements as supporting schedules.

Note to financial statement:

Notes to financial statements are known as additional information added to the end of financial statements that helps to explain the specific items in the statements and also provide a more comprehensive assessment of a company's financial condition.

It can also include information on debt, going concern criteria, contingent liabilities.

The significant accounting policies note:

It is the foundation for the preparation of financial statement and the financial statements are prepared with the rules and regulations framed by the GAAP.

To identify: The asset classification in Incorporation W’s balance sheet.

(2)

To determine

To report: The amounts of the following items in Incorporation W’s balance sheet.

(3)

To determine

To identify: The largest current asset and current liability of Incorporation W’s.

(4)

To determine

To identify: The current ratio of Incorporation W’s for the year 2014.

(5) (a)

To determine

To identify: The Company’s inventory valuation method.

5 (b)

To determine

To identify: The definition of cash equivalents.