Equity Articulation of Financial Statements

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CHAPTER 2 BASIC FINANCIAL STATEMENTS
OVERVIEW OF BRIEF EXERCISES, EXERCISES AND CRITICAL THINKING CASES Brief Exercises B. Ex. 2.1 B. Ex. 2.2 B. Ex. 2.3 B. Ex. 2.4 B. Ex. 2.5 B. Ex. 2.6 B. Ex. 2.7 B. Ex. 2.8 B. Ex. 2.9 B. Ex. 2.10 Learning Objectives 3 3 4 4 5 5 6 8 8 7 Learning Objectives 3

Topic Recording transactions Recording transactions Computing retained earnings Computing total liabilities Computing net income Computing net income Computing change in cash Alternative forms of equity Alternative forms of equity Articulation of financial statements

Skills Analysis, communication Analysis, communication Analysis Analysis Analysis Analysis Analysis Analysis Analysis Analysis

Exercises 2.1

2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 2.13 2.14 2.15 2.16 2.17

Topic Real World: American Airlines, Boston Celtics Nature of assets and liabilities Preparing a balance sheet Preparing a balance sheet Accounting principles and asset valuation Using the accounting equation Accounting equation Effects of business transactions Forms of business organizations Factors contributing to solvency Professional judgment Statement of cash flows Income statement Income statement Statement of cash flows Window dressing financial statement Real World: Home Depot Home Depot financial statements Real World: Intel Assessing financial results

Skills Communication

4 4 2 3 3 3 8 4 2 6 5 5 6 9 4–6 5

Analysis Analysis Communication, judgment Analysis Analysis Analysis Analysis Analysis, judgment Communication Analysis Analysis Analysis Analysis Analysis Analysis, communication Analysis, communication

© The McGraw-Hill Companies, Inc., 2010 Overview

Problems Sets A, B 2.1 A,B 2.2 A,B 2.3 A,B 2.4 A,B 2.5 A,B 2.6 A,B 2.7 A,B 2.8 A,B 2.9 A,B 2.10 A,B

Topic Preparing and evaluating a balance sheet Effects of transactions Effects of transactions Effects of transactions Preparing a balance sheet, effects of transactions Preparing a balance sheet, effects of transactions Preparing a balance sheet and statement of cash flows, effects of transactions Preparing financial statements, effects of of transactions, evaluating solvency Preparing a balance sheet, discussion of GAAP Preparing a balance sheet, discussion of GAAP

Learning Objectives 4 3 3 3 4 4 3, 4, 6 4–6 4, 8 2, 4

Skills Analysis, communication Analysis Analysis Analysis Communication, judgment Analysis, communication Analysis, communication Analysis, communication Analysis, communication, judgment Analysis, communication, judgment

© The McGraw-Hill Companies, Inc., 2010 Overview (p. 2)

Critical Thinking Cases 2.1 Prepare a realistic balance sheet for a hypothetical entity 2.2 Real World: Company of student choice Locate and evaluate the financial statements of a publicly owned company 2.3 Using a balance sheet 2.4 2.5 2.6 Using a statement of cash flows Window dressing

4 4–6

Judgment Analysis, communication, research Analysis, communication judgment Analysis, communication, judgment Analysis, communication, judgment Communication, research, technology

4 6 9

9 Real World: Public Company Accounting Oversight Board (Ethics, fraud & corporate governance) 2.7 1-7 Evaluating Company Efficiency Analysis, communication (Business Week) 2.8 4-5 Technology Real World: Cisco Systems Introduction to EDGAR (Internet) Note: Additional Internet assignments for this chapter are available both in Appendix B and on our home page: www.magpie.org/cyberlab

DESCRIPTIONS OF PROBLEMS AND CRITICAL THINKING CASES
Shown below are brief descriptions of each problem and case. These descriptions are accompanied by the estimated time (in minutes) required for completion and by a difficulty rating. The time estimates assume use of the partially filled-in working papers.

Problems (Sets A and B)
2.1 A,B Smokey Mountain Lodge/Deep River Lodge Prepare a balance sheet from a list of balance sheet items in random order. Determine the amount of one item as a plug figure....
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