Accounting Homework Help


# Description Question
  • Locate the notes to the financial statements.
  • Did you identify any investments in other entities?
  • If so, are they accounted for under the cost method, the equity method, or consolidation?
  • Are they significant to the overall entity's financial statements?
  • Identify which additional notes the company has in their Form 10-K.
  • In addition to the notes that you analyzed related to fixed assets,  goodwill, and debt, what other notes did you find significant in your  analysis of the company?
  • What additional disclosures would have been helpful in your evaluation of the company's financial health? 
  • Based on your additional analysis of the company, how has your  evaluation of the company's financial health changed since your analysis  during Week 4?
In no more than 525 words, use your company's 10k from Week 1 to report on the following:

Complete the following:

  • Explain the difference between rule-based accounting and principle-based accounting. State the advantages and disadvantages of each approach.
  • As accounting or auditing students, state your views on the importance of the awareness of cultural values around the world that impact international ethics and corporate governance.
  • Provide the International Federation of Accountants (IFAC) Code provisions. Compare the IFAC Code with the American Institute of Certified Public Accountants (AICPA) Code of Professional Conduct, and state whether there are any differences.














Because auditors must act with integrity and prioritize their public responsibility, discuss the conflict between the auditor’s client confidentiality obligations and the auditor’s ethical standards to gain the public trust.

Independent auditors have the obligation to maintain and uphold integrity of client-related information at all circumstances.  Research has unveiled that in the past, auditors have not been keen to accord adequate protection for the confidential electronic data due to their role in disclosing information to the public. In order to understand the conflict between the confidential obligations of the auditors to the clients and their ethical standards and obligations to the public, it is important to understand what their basic role or duty is in the audit process.  The fact remains that the sole aim of requesting audit of the firm’s financial documents is to uncover mishaps that could otherwise hurt the stakeholders of the organization significantly if they were not released to the public (Westra, 2017).

For instance, investors require due information in order to make the right decisions on where to invest and where not to invest. It is the obligation of the auditor to make sure that the information released to the public is accurate. However, at the same time, they are bound by the restricted nature of the audit options as envisaged in the provisions of the American Institute of Certified Public Accountants (AICPA) with regard to the client confidentiality rule (Westra, 2017). In other words, the auditor is torn between making the right decision in total adherence to this rule or earning a living.  It is important to understand that the professional codes of the United States accounting ethics have become so restrictive as opposed to those of other professional associations. This is the case even where the client practitioner privilege is accorded great recognition.  Most important to note is that accountant-client privilege has never received ounce of support by the federal courts. This means that there is a need for change in the confidentiality standards and obligations in order for the accountants to better serve the organization as well as the interests of the investors and the general public whose interests have remained vague and unprotected by the contemporary statements of responsibility (Brian, 2017).

With the above information in mind, therefore, the causes of the conflict between the auditor’s client confidentiality and their ethical standards to gain public trust can be ascertained.  The devil lies in the disclosure obligations of the auditor. There are unclear roles of the auditor with regard to their obligations to their client and the general public. In other words, if the findings of the audit process would remain confidential, what objective or motive of the audit would it be? This is a critical question that must be addressed to foster the interests of the client and as well strike a balance between them and those of the investors and the general public. This is the only way to instill public confidence and encourage investment ventures.

Explain and discuss how the Dodd-Frank Act and the whistle-blower program can protect accountants and auditors.

The Dodd-Frank Act pioneered by Obama administration has become of great significance in the accounting field. It has accommodated provisions that are aimed at streamlining the operations of banks and other lending institutions in the field.  The act has been key in regulating reserve requirements of banks and other related financial institutions.   It is hence a privilege for both the accountants and auditors. It is important to understand that in the past; the management of organizations have been seen compelling accountants to provide compromised financial information to lure the public into investing in it considering its financial health. However, the act has provided for disclosure of information in a manner that is best understood by the public before issuing any offers in the market. This is achieved through the Financial Stability Oversight Council that has been keen to enforce the interest of the consumers.

The Whistleblower Program provides incentives to the accountants and auditors as well as individuals in other capacities with incentives upon realization of possible or potential breaches of the Commodity Exchange Act.  The dilemma of client confidentiality obligations has hence been partly solved under this act (Hay, 2014). That has contributed significantly to a successful enforcement action as it is the role of auditors and accountants. By offering confidentiality, privacy and anti-retaliation protections for the whistleblowers, it has offered a chance to the accountants and auditors to uncover issues of fraudulent reporting and misappropriations in business firms.

Discuss why it is important for auditors to show evidence that they followed the ethical and professional standards

In as much as we focus a great deal of attention on the interests of the auditors, it is important to understand that the information released to the public could accrue the organization in question detrimental consequences. This is based on the fact that misreporting or using the wrong channels of communication could erode public and investor confidence that would otherwise cost the organization direly (Hay, 2014). It is for this reason that the information released by the auditors must be accompanied by a proof of evidence that the required ethical and professional standards were followed during the audit process. This is the only way to strike a balance between the interests of the organization and those of the investors.


Brian, B. D. (2017). Internal corporate investigations. Chicago, IL: American Bar Association, Section of Litigation.

Hay, D. (2014). The Routledge Companion to Auditing. London: Routledge.

Westra, B. (2017). Auditing essentials: Wet en regelgeving voor accountants. Amsterdam: BNA Media.



Key Assignment: Part 2


Summer 2018

Tax Research Case




Donald Mustard was a professional gambler, or at least, he gambled a lot.  His venue of choice was horse racing.  He gambled at tracks in Florida and Colorado. He went to the track 6 days a week for 48 weeks in 2018. He spent a substantial amount of time studying racing forms, programs, and other materials. He devoted from 60 to 80 hours each week to these gambling-related endeavors. He never placed bets on behalf of any other person, or sold tips, or collected commissions for placing bets, or functioned as a bookmaker. He gambled solely for his own account. He had no other profession or type of employment.  Donald managed to win $120,000 in 2018 from his gambling endeavors.  Unfortunately, he also lost $121,000.  As part of his professional gambling activity, Donald incurred various expenses that were directly related to his gambling activity:




Car expenses


Office expense




Meals (already at 50%)






Handicapping data





The amounts and the direct relationship to his gambling business at not in question.


Donald is aware that there is some sort of rule about limiting wagering losses to wagering gains but he is hoping that his other business expenses are deductible on his Schedule C.


Your Assignment:

Prepare a tax research memo addressed to the files that explains what Donald’s tax treatment of his gambling losses and business expenses is? 


You will need to support your conclusion using primary sources of tax law.  Your textbook is NOT primary authority.  You may research ANY tax authority (primary or secondary) but your solution must be derived and supported using only primary authority.


You must use proper citation form in your memo (see Exhibit 2-5 in Chapter 2 of your textbook).  The form for this communication should be professional and in the form of a tax research memo (see example on p.2-20). 


This memo should be whatever length you feel is appropriate to resolve the issues.  We do NOT use a bibliography or list of references in a tax research memo.  You will see that citations are within the text of the document. 

Your memo will be graded using a modified version of the College of Business Administration’s written communications rubric (posted in Blackboard).  For this assignment, points are distributed as follows:


Content              15

Organization       3

Audience            3

Style                 3

Mechanics          3

References                 3

Total                 30


Content will be broken down into 3 components: (1) Facts, (2) Analysis and (3) Conclusion. 




Exceeds Expectations


Content - Facts

All pertinent facts have been described in a clear and concise manner.  Distinguishing features of the fact pattern are highlighted.

Critical facts omitted.  Unable to apply or distinguish from other possible fact patterns or facts are merely copied from case.

Content - Analysis

All necessary references to authority have been made.  Authority which could apply but does not has been distinguished from that which does.  The analysis follows a logical pattern of application to the facts and supports author’s conclusion.

Analysis is deficient in reference to authoritative tax law.  Analysis lacks cohesion and does not support conclusion. 


Conclusion is clear and integrates with facts and analysis.  More than a simple sentence stating conclusion.  Cause and effect relationship between facts and analysis are made.  All open issues are responded to. Conclusion drawn is correct.

Conclusion is unclear and unsupported by analysis.  Reader is not able to form educated opinion on tax treatment of facts pattern.





ACCTG Summer 2018 Tax Research Case


Harvard Business School


Rev. November 3,1998

Statements of Cash Flows: Three Examples

    .           J?hn Stacey, a sales engineer for Aldhus Corporation, was worried. A flight delay had caused

him to ~s last week's accounting class in the evening MBA program in which he had enrolled at the suggestion of the personnel director at Aldhus a growing manufacturer of computer peripherals. The class he had missed had been devoted to a lecture and discussion of the statement of cash flows, and he was s~re the material he had missed would be covered in the weekly quiz that was part of each class sess.lOn. A classmate had faxed Stacey some notes distributed by their instructor, but they were too cryptic to be understood by anyone who had missed the class.

In desperation, John called Lucille Barnes, the assistant controller at Aldhus, to ask if she could take a few minutes to point him in the right direction toward understanding the statement of cash flows. She seemed delighted by the request, and they agreed to meet that afternoon.

The Meeting

At 2:00 P.M. John Stacey went to the office of Lucille Barnes with his notes and questions.

After they had exchanged greetings, Lucille handed John three cash flow statements from the ann~al reports of o~her high-technology companies (Exhibits 1, 2, and 3). John was worried that Lucille would ask him to explain them, and that she would see how confused he still was about some aspects of accounting; instead, Lucille began explaining.

Lucille Barnes (Assistant Controller): The statement of cash flows is really a very useful part of the set of three statements companies are required to prepare. In some cases, it tells more about what is actually happening in a business than either the balance sheet or income statement. The statements of cash flows that 1 have given you are very revealing. Let me give you a. brief overview of the structure and content of cash flow statements, and then you take some time to study these statements. I have prepared some questions to guide your study. Then, we can meet again tomorrow to discuss what you have learned and to answer any questions that remain. I do not think you have to worry about your next quiz because if you understand how balance sheets and income statements are prepared, much about the statement of cash flows will seem pretty obvious.

John Stacey: I hope you are right. I really like the accounting course, and I want to do well in it and to really learn the material. That's why I panicked when I could not understand the notes our instructor passed out last week.

Professors Julie H. Hertenstein and Willwm J. Bruns prepared this case as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.

Copyright © 1993 by the President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call1-800-S45-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means-electronic, mechanical, photocopying, recording, or otherwise=without the permission of Harvard Business School.





Examples Statements of Cash Flows: Three

              Lucille Barnes' F               t h                                                                                                   tudving the

                                           .       orge t ose notes for a while and just concentrate on s                        J'

statements       ave given you N ti           h                                                                    . d i thr e sections:

            .                 . ".                                   . 0 Ice t at the statement of cash flows is divide into                   e

operatmg activities mvestin         tivi .                "                                                   .                   th         h inflows

                                   ,                g ac vities, and financing activities. Each section shows e cas

and the cash outflows associated with th t typ f             "

                                                                         a        eo activity .

. O~eratin~ activities shows the inflows and outflows related to the fundamental operation~ of the baSIC line or hnes of business that the company is in. For example, it would include cash receipts from the sale of goods or services and the cash outflows for purchasing inventory, and paying wages, taxes and rent.

Investing activities shows cash flows for the purchase and sale of assets not generally held for ~esale and for th~ .maki~g and collecting of loans. (Maybe it should more appropriately be called the m~es~mg and dlslnvest~g activities section.) Here is where you would see if t~e compan~ S?ld.~ bU1ldl~g, purchased eqUipment, made a loan to a subsidiary, or purchased a piece of eqUity in I supplier.

Finally, financing activities shows the cash flows associated with increasing or decreasing the ~irm's fina~c~g, for exa:nple, issuing or repurchasing stock and borrowing or ~epa~ing lo.ans. It als~ ~ncludes. dividends, which are cash flows associated with equity. However, ironically. It does no include interest payments; these are included in operating activities.

John Stacey: That seems strange to me. Since loans are the reason interest payments are made, why are they not included in the financing activities section? You know, interest is to loans as dividends are to equity?

. L~cille Barnes: Actually in some other countries such as the United Kingdom interes~ is included in the financing activities section! But in the United States the Financial Accounting Sta_n~ards Board voted that interest payments should be in the operating activities section instead. This 1S one of these situations where you might have to do some adjusting if you were trymg to compare a U.K. company like British Petroleum to a U.S. company like Exxon.

John Stacey: That is interesting! How can I use each section of the statement?

Lucille Barnes: The operating activity section is the cash-flow engine of the company. When this engine is working effectively, it provides the cash flows to cover the cash needs of operations. In a healthy, growing company, we would expect growth in operating working capital accounts such. as inventory and accounts receivable (uses of cash) as well as in accounts payable and other operating pay ables (sources of cash). Obviously there can be quite a bit of variability in working capital accounts from period to period, but on average inventories, receivables, and accounts payable usually grow in growing companies. In addition, this operating cash-flow engine provides cash for needed investments, to repay debt, and to pay dividends. There are exceptions, of course. Start-up companies, for example, usually have negative cash flows from operations because they have not gotten their cash-flow engines up to speed. Companies in cyclical industries may have negative operating cash flow in a "down" year; a company that has experienced an extensive strike could also be expected to have negative cash flow from operations. Although an occasional year of negative operating cash flow does not spell disaster, nonetheless, we should expect operating cash flow, on average, to be positive.

Investing activities are a different story. Whereas we expect positive operating cash flow, we also expect a healthy company to continually invest in more plant, equipment, land, and other fixed assets to replace the assets that have been used up or have become technologically obsolete, as well as to expand and grow. Although companies often sell assets that are no longer of use to them, we would normally expect them to purchase more capital assets than they sell. As a result, in general, we expect negative cash flows from investing activities. Like operating activities, exceptions occur, especially if the firm divests a business or subsidiary.






Statltments of Cash Flows; Three Examples


Cash flows from financing activities could as easily be positive as negative in a healthy company, and they are likely to change back and forth. If the company's need for cash to invest exc~eds the cash flow generated by operating activities, this wiU requi~e extra financing by debt. or equity, therefore a positive financing cash flow. On the other hand, If cash flow from operating activities exceeds the investing needs, the firm will have excess cash to repay debt or pay more dividends, producing negative cash flows from financing.

John Stacey: I am beginning to see why you said that the statement of cash flows is so useful.

Where do you start your review and analysis?

lucille Barnes: A way to approach the cash-flow statement is to begin with cash flows from operating activities. If this is the cash-flow engine, then the first question is, "Is cash flow from operating activities greater, or less, than zero?" Also of interest is the trend: is it increasing or decreasing?

John Stacey: As you were talking, I glanced at the cash flows from operations sections of the first two statements (Exhibits 1 and 2) you gave me. They look very different. On the first, depreciation seems to provide cash flows, but there is no mention of depreciation on the second.


Lucille Barnes: Oops I I forget to mention that there are two ways operating cash flows can be presented. Sometimes they are presented using the indirect method as in the first statement I gave you (Exhibit 1). Using that method, net income is adjusted for all noncash revenues and expenses, one of which is depreciation. Depreciation is never a source of cash, but it is deducted to compute net income, so it must be added back. Likewise, operating cash flows not included in net income, such as purchases of inventory not sold, have to be added or subtracted.

When the direct method is used to present cash flows from operations, that section of the report looks much more like a summary from the operating cash account as it does in the second report I gave you (Exhibit 2).

John Stacey: Which of the methods is better?

Lucille Barnes: I think the direct statement of cash flows from operations is easier to understand, but few companies present their operating cash flows that way. Most of the statements you will see will use the indirect method. The reason for this is that if the direct method is used, a reconciliation of income to cash flows from operations is also required (see Exhibit 2), so most companies simply use the reconciliation as their summary of cash flows from operations.

But let's get back to how I approach the statement of cash flows.

Assuming operating cash flows are greater than zero, the next challenge is to decide whether they are adequate for important, routine expenditures. Again, our expectations are tempered by our understanding of the company and its situation. Just like we do not expect a start-up company to have positive operating cash flows, we also do not expect a company still in a very rapid growth phase to have enough cash flow from operations to cover its investments. However, for a mature company, we expect operations to generate enough cash to "keep the company whole." This would include the amount of investment required to replace those fixed assets that are used up, worn out, or technologically obsolete as well as cash required to pay the annual dividend which the shareholders have come to expect. It is hard to know precisely how much cash is required to keep the company's fixed assets "whole," and the cash-flow statement does not separate investing cash flows for replacement and renewal from those investing cash flows for expansion and growth. However, the annual depreciation amount is a very rough surrogate for the amount of fixed assets that need to be replaced each year. In periods when prices are rising, we should expect that the cost to replace assets would be somewhat greater than the cost of older assets that are being depreciated. Thus, it is




Slat.ements of Cash Flows: Three examples

- I

common to expect the portion of investing activities related to the purchase of fixed assets to exceed the annual depreciation.

After considering whether operating cash flows cover capi~~l.expenditures and dividends, I look to sec whether there are other major cash needs such as aC~Uls~~ons, stock ~epurchase, or debt repayment. If so, how do these cash needs fit with the availability of cash. Are these needs

discretionary, like acquisitions?

If there are cash shortfalls, I investigate how they are being funded. Is it by issuing. st~ck? By borrowing? By selling businesses or assets? In each case, I consid~r whether the ~ompany IS li~ely to be able to continue such funding, and for how long. Will t~e funding source continue .to be available, or are we likely nearing the limit? Will continuing to use this source hurt the company In any way?



John Stacey: Do you always have to look at all of those things in every case?


Lucille Barnes: No. But if you stop short of a full review, you may miss an important part of the story.


In evaluating the cash-flow statement, you are evaluating many pieces of evidence to produce an overall picture. However, it would be rare to find a company where all of the evidence is positive, or where all of the evidence is negative. To do a balanced evaluation, you must search out both the good news and the bad news in each cash-flow statement. To reach an overall conclusion you need to judge the relative importance of each piece of evidence and assess its relationship to the overall picture. Like in a legal case, your conclusion needs to be based on the "weight of the evidence."


I think the best way to learn about statements of cash flow is to study some carefully. The sta~ements I have given you are a place to start. I wrote out some questions to guide your study (the a.s~lgnme~t). Try to develop answers, and we can meet tomorrow to discuss them. By the time we finish. 1 think you will be well prepared for the quiz in your next class.

The ASSignment

Exhibits 1, 2, and 3 contain cash-flow statements from three companies. Each cash-flow statement has three years of data. Examine the contents of these cash-flow statements carefully. Answer the following questions about each of the three cash-flow statements.

r. For each of the years on the Statement of Cash Flows:


What were the firm's major sources of cash? Its major USes of cash?

Was .cash flow from operations! greater than or less than net incomer- Explain in detail the major reasons for the difference between these two figures.

Wa~ the firm able to generate enough cash from operations to pay for all of its capital expenditures?3



~ !~:en:::S lcalletd ne: cash ~rovided by operating activities, or cash flow from continuing operations 3 eyre erre to as rncome or loss from continuing operations .

Also called investm ts i d               .                                                              .

en in epreciabla assets, or purchases of plant property and                                                    .

4                                                                                                                     '                 r              eqUIpment.




Sr.'19menls 0' Cash Flows: Threo Examples

4.            Did the cash flow from operations cover both the capital expenditures and the firm's dividend payments, if any?

    5.       If it did, how did the firm invest its excess cash?

6.            f( not, what were the sources of cash the firm used to pay for the capital e penditures and/or dividends?

   7        Were the working capital (current asset and current liability) accounts other than cash and cash eguivalcnts primarily sources of cash, or users of cash?

            8.        What other major items affected ca h flows?

II. What was the trend in:

9.       Net income?

10.        Cash flow from (continuing) operations?

11.       Capi tal ex.penditure ?

J 2.        Divide.nds?

13.            Net borrowing (proceeds less payments of short- and long-term debt)?

14.            Working capital accounts?

Ill. Based on the evidence in the Stat ment of Cash Flows alone, what is your assessment of the financial strength of this business? Why?







Statements 01 Cash Flows: Three Examples


Exhibit 1 Alpha Corporation, Consolidated Statements of Cash Flows ($ millions)



Year Ended June 30,





Operating Activities




Loss Irom continuing operations








Amortization of capitalized software

Gain Irom sale 01 investments and other assets




Restructuring and other unusuat Items, net




Changes in other accounts anecting operatlons




Accounts receivable






Other current assets




Accounts payable and other current liabilities








Net cash provided by continuing operations




Net cash provided by (used in) discontinued operations




Net cash provided by operating activities







Investing Activities




Investment in depreciable assets




Proceeds from disposat of depreciable and other assets




Proceeds from the sale of discontinued operations




Investment in capitalized software








Net cash provided by (used in) investing activities




Financing Activittes




(Decrease) increase in snort-term borrowings




Proceeds from long-term debt




Payments of lonq-term debt




Proceeds from sale of Class 8 common stock




Purchase of treasury stock




Dividends paid




Net cash provided by (used in) financing activities




Effect of changes in foreign exchange rates




Increase (decrease) in cash equivalents




Cash and equivalents at beginning of year




Cash and equivalents at end of year







Statements of Cash Flows: Three Examples


Exhibit 2 Beta Corporation, Consolidated Statements of Cash Flows ($ thousand)

Year Ended December 31,

1991                      1990                                1989

Cash Flows trom Operating Activities:

Cash received from customers

Cash paid to suppliers and employees Interest received

Interest paid

Income taxes paid

Net cash generated by operating activIties

Cash Flows from InvestIng ActivIties:

Capital expenditures

Marketable securities purchases

Net cash used in investing activities

Cash Flow from Financing Activities:

Net payments under working capital line of credit Net payments under equipment line 01 credit Principal payments under capital lease obligations Proceeds (payment) of subordinated debt Proceeds lrom the issuance 01 common stock

Net cash provided by (used in) financing activities Ellect 01 exchange rate changes on cash

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning 01 year Cash and cash equivalents at end 01 year

Reconclllatlon of Net Income to Net Cash Generated by Operating Activities:

Net income

Adjustments to Reconcile Net Income to Net Cash Consumed by Operating Activities:

Bad debt provision

Depreciation and amortization Amortization of original issue discount Loss on disposition of assets

Compensation expense related to stock grants

Changes in Assets and Liabilities: (Lncrease) in accounts receivable (Increase) decrease in inventory

(Increase) decrease in deposits and other assets Increase (decrease) in accounts payable and

accrued expenses Tolal adjustments

Net cash generated by operating activities

$83,865 (TI,820) 643 (536) (2,233)




































$ 5.375

$ 5,159

(6,031 ) (8,000) (14,031 )

(985) (169) (5,000) 23,082 16,928


6,812 5,375 $12,187

s 6,323

$ 5.201

$ 417



















( 2,404)


S 3,919

s 7,000

98 2,231 68 58

(1,550) 1,043 (762)

2.0673.253:> 3,670





Statement. of Cash Flows: Th,.. Eumpl.s

Exhibit 3

Gamma Corporation, Consolidated Statements of Cash Flows (S thousand)





Years Ended




June 29,

June 30,

July 1,






Cash Flows from Operating Acllvitles:




Net Income/(Ioss)

S (617,427)

$ 74,393

$ 1,072,610



Adjustments to Reconcile Net Income to




Net Cash Provided by Operating Activities:




Depreciation and amortization




Other adjustments to income




(Increase)/decrease in accounts receivable




(Increase)/decrease in inventories




(Increase)fdecrease in prepaid expenses




Increase/(decrease) in accounts payable




(Decrease) in taxes




Increase in deferred revenues and customer advances




Increase in restructuring reserve




Increase in other liabilities




Total adjustments




Net cash flows from operating activities




Cash Flows from Investing Activities:




Purchase of plant, property, and equipment




(Increase) of other assets, net




Purchase of Kienzle business




Net cash flows from investing activities

(1,026.591 )



Net cash flows from operating and investing activities




Net Flows from Financing Activities:




Proceeds from issuance of debt




Payments to retire debt




Purchase of treasury shares




Issuance of treasury shares, including tax benefits




Net cash flows from financing activities




Net increase/(decrease) in cash and cash equivalents




Cash and cash equivalents at beginning of year




Cash and cash equivalents at end of year






Accounting Case Writeup

With changes in reimbursement and revenue, health care managers are often urged to control or reduce costs while still providing high quality care for patients. Though your Ittleson text uses examples related to an applesauce company, the principles utilized are also relevant to health care settings. The risks and rewards resulting from financial decisions could mean the different between life and death for patients. Does the health care provider have the goods and services to take care of those that come seeking care?

To prepare for this Discussion, complete the readings in your Learning Resources.

Post a comprehensive response to the following:

Consider the relationship of costs to changes in volume and profitability as described in your Learning Resources. Provide two explanations for the current emphasis on cost control and cost reduction in health care. Include at least one outside resource from a recent (within the last 5 years) journal article to support your statements. Include information about how risk and uncertainty should be factored into cost control decisions in health care.

Be sure to support your work with specific citations from this week’s Learning Resources and/or additional scholarly sources as appropriate. Your citations must be in APA format.

200 to 250 words

Keeping Costs Under Control


Southern New Hampslilfe University

ACC 660 Module Eight Memo: Internal Controls Guidelines and Rubric

Prompt: Brenda, an accounts payable employee, is going out on maternity leave for three months. Susan, another member of the accounting department who is responsible for bank reconciliations and filing, has given her two weeks' notice. Their departures leave just your three existing members of the accounting department. What is your plan to cover their responsibilities? Write a memo to the CEO of your company, from a controller's perspective, considering the need for internal controls.

Guidelines for Submission: Your memo must be submitted as a one- to two-page Microsoft Word document with double spacing, 12-point Times New Roman font, one-inch margins, and at least three scholarly resources cited in APA format.

Critical Elements

Exemplary (100)

Proficient (90)

Needs Improvement (70)

Not Evident (0)


Need for

Meets "Proficient" criteria and

Conveys the need for internal

Fails to make a persuasive

Does not make an argument for


Internal Controls

supports recommendation for

controls to be put in place

argument for internal controls to

internal controls to be put in



internal controls with scholarly


be put in place









Critical Thinking

Draws insightful conclusions that

Draws informed conclusions that

Draws logical conclusions, but

Does not draw logical



are thoroughly defended with

are justified with evidence

does not defend with evidence

concl usions



evidence and examples






Incorporates many scholarly

Incorporates some scholarly

Incorporates very few scholarly

Does not incorporate scholarly



resources effectively that reflect

resources effectively that reflect

resources that reflect depth and

resources that reflect depth and



depth and breadth of research

depth and breadth of research

breadth of research

breadth of research


Articulation of

Submission is free of errors

Submission has no major errors

Submission has major errors

Submission has critical errors



related to citations, grammar,

related to citations, grammar,

related to citations, grammar,

related to citations, grammar,



spelling, syntax, and organization

spelling, syntax, or organization

spelling, syntax, or organization

spelling, syntax, or organization



and is presented in a professional


that negatively impact readability

that prevent understanding of



and easy-to-read format


and articulation of main ideas










Need help writing a memo, attached is the Rubric with the scenario and guidelines.

Balance Sheet and Single-Step Income Statement


The objective is to test student skills in using the given financial data to prepare a comprehensive balance sheet and multi-step income statement in good form .The given financial data  will be comprised of all the various subgroupings that are reported in a multi-step income statement and  balance sheet (operating revenues and expenses, other revenues and expenses and irregular items, current assets, investment, fixed assets, intangibles,  current liabilities, long-term liabilities, and the equity sections).


·         Read the given financial data of New York Traders Inc.

·         Determine which accounts belong to the balance sheet and which accounts belong to the income statement.

·         Determine to which subgroup of balance sheet or income statement each account belongs.

·         Compute the correct account balances that should be reported in  balance sheet and correct amounts of revenues and expenses that should be reported in income statement.

·         Arrange the accounts in proper order and functionality.

·         Prepare a comprehensive balance sheet in good form.

·         Prepare a multi-step income statement in good form.

·         Submit the Course Project in Week 7.

Grading Rubric





Making proper selection of accounts relative to the balance sheet or the income statement



From the provided listing of accounts, determine which accounts are balance sheet accounts and which accounts are income statement accounts.

Putting the accounts into the proper subgroup according to functionality



Each account belongs to a particular subgroup. The student is to determine to which subgroup the account belongs. This should be done according to functionality.

Prepare the balance sheet in good form with correct amount of financial items.



Proper form is important in the preparation of the balance sheet. Examples can be found in the text.

Prepare the income statement in good form with correct amount of financial items.



Proper form is important in the preparation of the income statement. Examples can be found in the text.

Showing full work of computation to arrive at the correct amount of financial items



A quality paper will meet or exceed all of the above requirements.





Financial Data of New York Traders Inc. as of January 1, 2016

Accounts Payable


Account Receivable


Accumulated Depreciations


Additional Paid-In Capital


Allowance for Doubtful Accounts


Building and Equipment




Common Stock




Customer Deposits (expected to be paid in 2017)




Income Taxes Payable


Inventories @ $25/unit


Long-term Investments in Warren Co.


Deposits With Vendors




Mortgage Payable ($2,780 per month)


2% Notes Payable to Banks ( due 2017)


Notes Receivable (due 2017)




Retained Earnings




Twenty-year, 12% Bonds, Due 1/1/2020


Deposts with Vendors


Financial Data of New York Traders Inc. for the Year 2016


Finished Goods inventory purchased from suppliers on account.

2/10/2016 10,000 units @ $26 each

6/12/2016 15,000 units @ $28 each

10/23/2016 12,000 units @ $29 each

11/25/2016 8,000 units @ $30 each

New York Traders Inc. uses periodic inventory system and LIFO costing method. All purchases and sales are made on account.


Payments made to suppliers on account during 2016 are $1,124,450.


Sales made to customers on account are 49,356 units @ $36 each


Cash collected from customers during 2016 is $1,750,700


Total Interest paid on Notes Payable and Bonds Payable amounted to $17,415


Rental Income on property leased out $ 25,650


New York Traders Inc. was operating a retail store at Chicago. Original cost of building and equipment was $120,000 with a book value of $95,000. During 2016 New York Traders disposed of this store at a loss of $35,800.


New York Traders Inc. wants to make an allowance for doubtful debts at 2% on accounts receivable for the year 2016.


Selling and Administrative expenses are $128,475. These expenses  include $56,000 depreciation expense on Building and Equipment  but exclude bad debts expenses.


Income Tax Expense paid is $90,500. New York Traders Income Tax Rate for 2016 is 30%


ACCT 550 – Course Project Check Figures


1)      Multi-step Income Statement

   Net Income $131, 309

   Gross Profit $399,916

   Operating Income $270,255

   Interest Expense $72,520


2)      The Balance Sheet

   Retained Earnings $258,809

   Cash $542,650

   Total Current Assets $952,980

   Total Current Liabilities $433,646

   Total Assets $2,511,145

   Total Liabilities $1,667,486





Balance Sheet and Single-Step Income Statement

Case 7-10 Beazer Homes

Beazer Homes is a home-building company headquartered in Atlanta, Georgia. Its stock is listed on the New York Stock Exchange. Beazer is required to file Form 10-Q and Form 10-K, as well as an 8-K form when certain changes occur, such as restating financial statements.

As a homebuilder, Beazer often builds “model homes” for prospective homebuyers to tour while the remainder of a neighborhood and its future homes are under construction. As one of the last homes to be sold, model homes often may not be sold to a homebuyer for years, and thus may not provide a homebuilder with revenue and income on their sale until years after construction.

What follows is a description of the SEC’s agreement, in SEC v. Michael T. Rand, to resolve charges that Beazer engaged in fraudulent accounting that led to material noncompliance with federal securities laws by improperly inflating Beazer’s income by reducing or eliminating previously established artificial reserves and improperly recognizing sales revenue and income in sale-leaseback transactions involving its model homes.1 

Sale-Leaseback Scheme

Under its sales-leaseback program, Beazer sold its model homes to investors, typically at a discounted price, thereby permitting it to recognize revenue and income from the sales. Under the “leaseback” portion of the transaction, Beazer leased back from the investor/buyer the same model homes, which Beazer could then use to show prospective home buyers.

In December 2005, the chief accounting officer, Michael T. Rand, CPA, entered into a secret side-agreement with one or more GMAC Model Home Finance personnel under which: (a) Beazer would “sell” the model homes and recognize revenue and income from such sales; (b) the homes would be leased back to Beazer for its use; but (c) Beazer would secretly receive a share of any profits from any subsequent sale of the model homes to a third party at the end of the leases. Under GAAP, a seller is not permitted to recognize revenue and income from a sale in a sale-leaseback transaction if the seller retains a continuing interest in the property after it has been sold. Beazer’s continuing and secret interest in a share of any profits from the ultimate sale of the models was such a continuing interest.

What follows is a table showing model homes sold and improper pretax income recognized from the sale-leaseback transactions in violation of GAAP.

Overstated Pretax Income from Sale-Leaseback Transactions

Quarter Ended

# Homes Sold

Overstated Pretax Income

December 31, 2005


$8.0 million

March 31, 2006


$4.2 million

June 30, 2006


$1.6 million

September 30, 2006


$8.3 million

Page 497

Cookie-Jar Reserves

Prior to 2006, Rand and other Beazer employees engaged in an accounting scheme involving “cookie-jar accounting.” Specifically, Rand improperly decreased Beazer’s income by artificially establishing, increasing, and/or maintaining future anticipated expenses or “reserves.” He executed this strategy by manipulating, among other accounts, Beazer’s land development and house reserve accounts.

In fiscal year 2006, when Beazer was in jeopardy of not meeting analysts’ expectations, Rand eliminated certain unnecessary excess reserves that had been built up, thereby improperly boosting Beazer’s pretax income by over $27.5 million. Beazer’s arbitrary elimination of reserves to boost income resulted in financial statements that were not compiled in accordance with GAAP.

Land Inventory Accounting

As part of its home building and sale operations, Beazer purchased parcels of land upon which it constructed houses to form subdivisions. Beazer recorded the acquired land, along with costs for the common development of the parcel, such as sewer systems and streets, as an asset on Beazer’s balance sheet in the land inventory accounts. As subdivisions were built, Beazer allocated the costs accumulated in the land inventory accounts to individual home lots, which were then offered for sale. When the home sale was recorded in Beazer’s books, all associated homebuilding costs, including allocated costs recorded in the land inventory accounts, were expensed as a cost of the sale, with a corresponding reduction, or credit, in the land inventory account.

Because Beazer sold houses within a subdivision as the development of that subdivision progressed, the land inventory expense recorded for any particular house sale was necessarily an estimate. The setting of inventory credits was done by each division based on estimates of costs to acquire, develop, and complete subdivisions plus an added amount for contingencies. Once established, divisions needed approval from Rand, who reviewed the reserves on a monthly basis, to make adjustments.

As additional houses in a subdivision were sold, the land inventory account continued to be decreased (credited) by amounts representing the land acquisition and development costs allocated to each individual house. If costs had been allocated properly, then, shortly after the final house in a development had been sold, the balance in the land inventory account should have been at or near zero.

What follows is a table showing the overstatement in land inventory costs between 2001 and 2005.

Overstatement of Land Inventory Costs


Quarter 1

Quarter 2

Quarter 3

Quarter 4



$  584,000























In order to reduce its first quarter 2002 earnings, which had exceeded analysts’ EPS expectations, Rand fraudulently increased the land inventory expense recorded for homes sold during the quarter.

On January 8, 2002, after the end of the first quarter, Rand e-mailed a target earnings amount to the relevant financial personnel in numerous Beazer divisions with instructions not to exceed the target by a certain amount. The distributed target for each division was less than each division’s previously expected quarterly results. Rand advised the divisions to review their land inventory accounts in order to increase expenses and reduce earnings. In one particular e-mail, Rand instructed the Florida division to provide “more than adequate land allocations in communities closing out this year” as a means to reduce its earnings.

Page 498

On January 10, 2002, Rand, via e-mails, directed certain divisions to, “[s]et aside all the reserves you reasonably can . . . the quarter is too high.” This was followed by a series of e-mails in which Rand specified the amounts by which certain divisions should increase their reserves, along with targets for their EBIT (earnings before interest and taxes). The divisions substantially carried out his directions, and Rand was able to reduce Beazer’s quarterly EPS from $2.60 to $2.47 a share, which exceeded analysts’ consensus of $2.00 per share. In total, Beazer recorded approximately $1.827 million in excess land inventory costs for that quarter, or approximately 8 percent of its reported net income.

By increasing land inventory expenses, Rand caused Beazer to understate its net income by a total of $56 million ($33 million after tax effect; approximately 5 percent of reported net income) between 2000 and 2005. Beginning in the first quarter of 2006, Rand began to reverse the reserves existing in the land inventory accounts, which increased then-current period earnings. The credit balances in land inventory accounts were debited (i.e., zeroed out), and a cost of sales expense credited (i.e., reduced). These reversals improperly reduced expenses and increased Beazer’s earnings. During all four quarters of 2006, Rand caused Beazer to release these land inventory reserves, boosting then-current period earnings by approximately $100,000 in the first quarter of 2006, approximately $301,000 in the second quarter of 2006, approximately $14,278,000 in the third quarter of 2006, and approximately $10,816,000 in the fourth quarter of 2006.

Manipulation of “House Cost-to-Complete” Reserves

Under its accounting policies, Beazer recorded revenue and profit on the sale of a house after the close of the sale of that house to a homebuyer. In the journal entries to record the sale, Beazer typically reserved a portion of its profit earned on the house. This reserve, called a “house cost-to-complete” reserve, was established to cover any unknown expenses that Beazer might incur on the sold house after the close, such as minor repairs or final cosmetic touch-ups. Although the amount of this reserve varied by region, it was typically $1,000 to $4,000 per house.

Beazer’s policy was to reverse any unused portion of the house cost-­to-complete reserve within four to nine months after the close, taking any unused portion into income at that time. As specified below, in various quarters between 2000 and 2005, Rand over-reserved house cost-to-complete expenses. Rand then took steps to maintain these reserves beyond the typical four to nine months and until increased earnings were required in future periods.

The following table shows the over-expensing of the cost-to-complete expense from 2000 to 2005.

Over-Expensing of the Cost-to-Complete Expense


Quarter 1

Quarter 2

Quarter 3

Quarter 4




$     5,000



























Beginning in 2006, Beazer began reversing some of the excess cost-to-complete reserves that it had previously recorded. As a result of Rand’s directives, Beazer reduced its cost of sales expense by approximately $1.5 million by reducing the cost-to-complete reserve to zero on a number of houses. The following shows the amount of reversal of excess cost-to­-complete reserves as earnings of the period that were previously recorded fraudulently.

Page 499

Reversal of Excess Cost-to-Complete Reserves


Quarter Ended

Amount of Reversal



March 31

$   183,000



September 30




December 31

$  209,000



March 31



Additionally, at Rand’s instruction certain Beazer divisions, in order to report more income, failed to establish a house cost-to-complete reserve on house sales closing during the quarter. Beazer’s Las Vegas division failed to record any cost-to-complete reserve for approximately 85 houses sold during December 2005. This resulted in an improper recognition, in violation of GAAP, of more than $200,000 of income for the period. All totaled, the additional income due to cost-to-complete reserve accounting added approximately $0.03 to Beazer’s EPS.

Deloitte & Touche

Beazer’s auditor, Deloitte & Touche, specifically advised Rand via e-mail that Beazer’s appreciation rights in the homes represented a continuing interest that, pursuant to GAAP, precluded Beazer from recognizing revenue when the homes were sold to GMAC. In an attempt to circumvent GAAP, and to deceive Deloitte, Rand caused the final, written versions of the sale-leaseback agreements to omit any reference to Beazer’s continuing profit participation. Rand then directed, by e-mail, his subordinates to record revenue at the time the model homes were initially sold to the GMAC investor pools. Rand provided Deloitte with copies of the sale-leaseback agreements that intentionally omitted the provisions relating to the continuing profit participation by Beazer. Rand also failed to disclose the side agreements to Deloitte.

Additionally, on January 18, 2006, Rand provided to Deloitte a memo that specifically stated Beazer would not “participate in the appreciation” of the leased assets (model homes). Based on Rand’s concealment and misrepresentations, Deloitte agreed that immediate revenue recognition was proper.

As reported by CFO Magazine and summarized in the following paragraphs,2 a class-action lawsuit filed against Deloitte was settled on May 7, 2009. The agreement said that the audit firm should have considered the homebuilder’s “make the numbers” culture to be a red flag as the housing market tanked. Deloitte agreed to pay investors of Beazer Homes nearly $1 million to settle the claim.

The investors had accused Beazer of managing earnings, recognizing revenue earlier than allowed under generally accepted accounting principles, improperly accounting for sale-leaseback transactions, creating “cookie-jar” reserves, and not recording land and goodwill impairment charges at the proper time.

The investors accused Deloitte of turning “a blind eye” to the myriad of “red flags” that should have alerted the firm to potential GAAP violations. These warning signs included the “excessive pressure” employees were under to meet their higher-ups’ sales goals, tight competition in Beazer’s market, and weak internal controls. Accusing the auditor of “severe recklessness,” the shareholders alleged, for example, that Deloitte should have noticed that Beazer was likely overdue in recording impairments on its land assets, as the real estate market began to decline, among the other alleged accounting violations.

“Deloitte either knowingly ignored or recklessly disregarded Beazer’s wide-ranging material control deficiencies and material weaknesses during the class period,” according to the shareholders’ complaint. “For example, Deloitte was specifically aware that financial periods were regularly held open or re-opened because it had access to Beazer’s detailed financial and accounting information via, among other means, access to Beazer’s JD Edwards software.”

In the Beazer settlement, Deloitte denied all liability and settled to avoid the expense and uncertainty of continued litigation, according to a spokeswoman.

Restatements of Financial Statements

Due to Beazer’s material noncompliance with the financial reporting requirements of the federal securities laws, Page 500Beazer was required to issue accounting restatements. On May 12, 2008, Beazer filed accounting restatements for the fiscal year 2006. In various reports filed that day, Beazer restated its financial statements for fiscal 2006 and each of the first three quarters of fiscal 2006. Beazer admitted to the improper accounting with the following statement:

During the course of the investigation, the Audit Committee discovered accounting and financial reporting errors and/or irregularities that required restatement resulting primarily from: (1) inappropriate accumulation of reserves and/or accrued liabilities associated with land development and house costs (“Inventory Reserves”), and (2) inaccurate revenue recognition with respect to certain model home sale-leaseback transactions.

In the filings, Beazer further acknowledged material weaknesses in its internal control over financial reporting including in its control environment and the design of accounting policy, procedures, and controls—“specifically related to the application of GAAP in accounting for certain estimates involving significant management judgments.”

As set forth in those filings, Beazer acknowledged that its material weaknesses had several impacts on the Company’s financial reporting, including “[i]nappropriate reserves and other accrued liabilities [being] recorded relating to land development costs, house construction costs and warranty accruals” and “[t]he accounting for certain model home sale and leaseback agreements [being] not in compliance with GAAP. . . [as the] Company’s arrangement for certain sale and leaseback transactions.”

Those filings went on to state that Beazer had “terminated our former Chief Accounting Officer who we believe may have caused, or allowed to cause, the internal control breakdown”; and that Beazer “believe[d] his termination has addressed concerns about the internal control deficiencies that we believe he caused or permitted to occur.”

According to a separate filing by the SEC against Ian McCarthy,3 former CEO of Beazer Homes, during the 12-month period following Beazer’s filing of its inaccurate financial statements in 2006, and before any restatement or correcting disclosure by Beazer, McCarthy received bonuses and incentive- and equity-based compensation and profits from his sale of Beazer stock. In fiscal year 2006, McCarthy received a bonus of $7.1 million, of which he received $5,706,949 in cash. During fiscal year 2006 and the first quarter of fiscal 2007, McCarthy also realized total profits of $7.3 million dollars through his sale of Beazer stock. During this same time period, McCarthy was awarded 157,526 shares of restricted Beazer common stock, which were to vest in various subsequent years upon the achievement of certain performance criteria or continued employment. Of these amounts, 78,763 shares failed to vest as the result of Beazer failing to meet required performance criteria.

McCarthy had not reimbursed Beazer for the bonuses and incentive- and equity-based compensation and profits from his sale of Beazer stock received from Beazer during the relevant statutory periods, as required under the Sarbanes-Oxley Act and its clawback provision.

In July 2009, a federal bill of information was filed in U.S. District Court charging Beazer with, among other things, participation in the conspiracy and securities fraud with Rand. Beazer accepted responsibility for those charges and, in a deferred prosecution agreement, agreed to pay restitution of $50 million. Rand was indicted by a federal grand jury in August 2010.

On July 18, 2014, a federal jury convicted Rand of conspiracy and obstruction of justice charges stemming from the federal investigation into the seven-year accounting fraud and related conspiracy at Beazer. On April 30, 2015, U.S. District Judge Robert J. Conrad Jr. sentenced Rand to 120 months in prison and to three years of supervised release on conspiracy and obstruction of justice charges in connection with the investigation.4 

Page 501A statement released by the U.S. Attorney’s Office quotes John A. Strong, the special agent in charge for the Charlotte Division of the FBI:

The U.S. Attorney’s Office is committed to safeguarding the integrity of our financial markets from corporate executives like Rand, who put profits ahead of duty. Rand’s actions breached his obligation to the investors and the public and jeopardized the stability of the housing industry. Today’s verdict should send a clear message that corporate fraud, in this case cooking the books, will not be tolerated and you engage in such frauds at the risk of your freedom.5



1.       What role did organizational ethics play in the Beazer Homes fraud? Is this something the auditors of Deloitte should have been more conscious of? Explain.

2.      Evaluate Beazer’s accounting for cost-to-complete reserves from a GAAP perspective. Was the initial accounting for the reserve in conformity with GAAP? What was the company trying to achieve with its accounting?

3.      Categorize the accounting devices used by Beazer into one the financial shenanigan groupings. Include a discussion of how earnings were managed in each case.

4.      Page 502Assume you were hired to analyze the information in this case and write a two- to three-page report on your findings. Discuss each element of the fraud and why Beazer, Rand, and/or Deloitte violated ethical and professional standards.


Case 7-10 Beazer Homes

Module Readings and Assignment: 


Complete the following readings early in the module:      

•Read the online lectures for the Module   

•From the textbook, Accounting for Managers: Interpreting Accounting Information for Decision Making, 5th, read the following chapters:   

◦Chapter 16: Budgeting   

◾Chapter 16 textbook Microsoft PowerPoint slides       


◦Chapter 17: Budgetary Control   

◾Chapter 17 textbook Microsoft PowerPoint slides       


◦Chapter 18: Strategic Management Accounting   

◾Chapter 18 textbook Microsoft PowerPoint slides     


Module Overview:     In the previous modules, you have learned about financial reporting, where you use accounting information for external reporting to communicate the earnings and financial position of the business to external users. You also learned about management accounting that deals with using accounting information to analyze and communicate financial results to internal management for decision-making purposes. As a manager, you need to be forward-looking. Reviewing past financial information of your company is not enough because you need to be able to forecast future financial conditions or operating results. This requires planning various activities of your business. 


In this module, you will learn about forecasting, budgeting, and strategic management accounting (SMA) that broadens the concept of management accounting. You will explore how to use accounting information to create a strategic business plan and develop strategies to achieve a sustainable competitive advantage using SMA concepts

Budget represents an estimate of future costs and revenues and provides you with a plan to utilize labor and material resources. In this module, you will explore the various types of forecasting and budgeting techniques.  


To develop a strategic plan, as a nonaccounting manager, you need to analyze and link management accounting data and performance information with business strategies. You also need to extend the scope of management accounting beyond the organization. For this perspective, you will need to focus on variables that are external to the firm, such as variables relating to markets, customers, and competitors. This external focus will help you develop a sustainable competitive advantage, which is the primary element of your long-term growth strategy.     In this assignment, you will analyze the factors that affect the long-term growth strategy of a company.   


Respond to the following: 

•What can you learn from the financial statements of competitors that determine the relative cost position of your company?     

•What are some of the ways in which you can secure a sustainable cost advantage over the competition?     

•How does maintaining a strong understanding of relative costs help you maintain the competitive advantage?     

•How do you use cost structure to differentiate products? Do you think product differentiation is a successful growth strategy? Why or why not?     

•What is the usefulness of conducting a customer profitability analysis? 

 Submission Details:  

By Friday June 22, 2018 post your response to the Discussion Area. 

Write your initial response in 300–500 words. turned-in on time, Grading criteria followed All assignment qualifications addressed correctly, Grading Criteria followed, Include Question followed by the answer  Reference Page Included Cover page Included, Paragraphs  Indented,  Running-head included, main heading should be centered; all  new  paragraphs should be indented;  paper should be right ragged,   not right justified; references,  should always go on a standalone  page. abstracts are not usually indented; acronyms should be spelled out when using them  for  the first time, for example HR. references as listed are APA  standard.   When you  submit your papers through, your overall  similarity  index  score should not be exceedingly high, with   ten to  fifteen percent  being  the maximum,  Please make sure your APA  formatting of citations. I have provided the  APA resource cite for you., Please work on using literature within the span of the last 5 years,  keep in mind there should not be any one, two, or three sentence   paragraphs. Your response should be thorough and address all components of the discussion question in detail, include citations of all sources, where needed, according to the APA Style, and demonstrate accurate spelling, grammar, and punctuation. 

Do the following when responding: 

•Read your answers. 

•Provide substantive comments to posts by ◦contributing new, relevant information from course readings, Web sites, or other sources; ◦building on the remarks or questions; or ◦sharing practical examples of key concepts from your professional or personal experiences 

•Respond to feedback on your posting and provide feedback to ideas. 

•Make sure your writing  ◦is clear, concise, and organized; ◦demonstrates ethical scholarship in accurate representation and attribution of sources; and ◦displays accurate spelling, grammar, and punctuation.  

Grading Criteria:

Assignment Components     

Initial response was:     

•Insightful, original, accurate, and timely.  

•Substantive and demonstrated advanced understanding of concepts.  •Compiled/synthesized theories and concepts drawn from a variety of sources to support statements and conclusions    

Discussion Response:     

•Offered points of view supported by research.   

•Added challenging questions that promoted discussion.   

•Drew relationships between one or more points in the discussion.    


•Wrote in a clear, concise, formal, and organized manner.   

•Responses were error free.   

•Information from sources, where applicable, was paraphrased appropriately and accurately cited.

Assignment: Discussion-Predicting and Developing a Long-Term Growth Strategy

Practice: Week 5 Discussion Question 1


Review case 7-9, The North Face, Inc.

Respond to the following:

Should auditors conceal materiality levels from audit clients?



Case 7-9 The North Face, Inc.

The North Face, Inc. (North Face) is an American outdoor product company specializing in outerwear, fleece, coats, shirts, footwear, and equipment such as backpacks, tents, and sleeping bags. North Face sells clothing and equipment lines catered toward wilderness chic, climbers, mountaineers, skiers, snowboarders, hikers, and endurance athletes. The company sponsors professional athletes from the worlds of running, climbing, skiing, and snowboarding.

North Face is located in Alameda, California, along with an affiliated company, Jan Sport. These two companies manufacture about half of all small backpacks sold in the United States. Both companies are owned by VF Corporation, an American apparel corporation.

The North Face brand was established in 1968 in San Francisco. Following years of success built on sales to a high-end customer base, in the 1990s North Face was forced to compete with mass-market brands sold by the major discount retailers. It was at that point the company engaged in accounting shenanigans that led to it being acquired by VF Corporation.

Barter Transactions1

Consumer demand for North Face products was steadily growing by the mid-1980s and the higher levels of demand for production were causing the manufacturing facilities to be overburdened. Pressure existed to maintain the level of production that was required. As North Face continued to grow in sales throughout the1980s and into the 1990s, the management team set aggressive sales goals. In the mid-1990s the team established the goal of reaching $1 billion in annual sales by the year 2003. The pressure prompted Christopher Crawford, the company’s chief financial officer (CFO), and Todd Katz, the vice president of sales, to negotiate a large transaction with a barter company and then proceed to improperly account for it in the financial statements.2

North Face entered into two major barter transactions in 1997 and 1998. The barter company North Face dealt with typically bought excess inventory in exchange for trade credits. The trade credits could be redeemed by North Face only through the barter company, and most often the trade credits were used to purchase advertising, printing, or travel services.

North Face began negotiating a potential barter transaction in early December 1997. The basic terms were that the barter company would purchase $7.8 million of excess inventory North Face had on hand. In exchange for that inventory, North Face would receive $7.8 million of trade credits that were redeemable only through the barter company.

Before North Face finalized the barter transaction, Crawford asked Deloitte & Touche, North Face’s external auditors, for advice on how to account for a barter sale. The auditors provided Crawford with the accounting literature describing GAAP relating to non-monetary exchanges. That literature generally precludes companies from recognizing revenue on barter transactions when the only consideration received by the seller is trade credits.

What Crawford did next highlights one of the many ways a company can structure a transaction to manage earnings and achieve the financial results desired rather than report what should be recorded as revenue under GAAP.

Page 493Crawford structured the transaction to recognize profit on the trade credits. First, he required the barter company to pay a portion of the purchase price in cash. Crawford agreed that North Face would guarantee that the barter company would receive at least a 60 percent recovery of the total purchase price when it resold the product. In exchange for the guarantee, the barter company agreed to pay approximately 50 percent of the total purchase price in cash and the rest in trade credits. This guarantee took the form of an oral side agreement that was not disclosed to the auditors.

Second, Crawford split the transaction into two parts on two days before the year-end December 31, 1997. One part of the transaction was to be recorded in the fourth quarter of 1997, the other to be recorded in the first quarter of 1998. Crawford structured the two parts of the barter sale so that all of the cash consideration and a portion of the trade credits would be received in the fourth quarter of 1997. The barter credit portion of the fourth quarter transaction was structured to allow profit recognition for the barter credits despite the objections of the auditors. The consideration for the 1998 first quarter transaction consisted solely of trade credits.

On December 29, 1997, North Face recorded a $5.15 million sale to the barter company. The barter company paid $3.51 million in cash and issued $1.64 million in trade credits. North Face recognized its full normal profit margin on the sale. Just 10 days later on January 8, 1998, North Face recorded another sale to the barter company, this time for $2.65 million in trade credits, with no cash consideration. North Face received only trade credits from the barter company for this final portion of the $7.8 million total transaction. Again, North Face recognized its full normal profit margin on the sale.

Materiality Issues

Crawford was a CPA and knew all about the materiality criteria that auditors use to judge whether they will accept a client’s accounting for a disputed transaction. He committed the fraud because he saw internal control weaknesses and believed no one would notice. Crawford realized that if he made sure the portion of the barter transaction recorded during the fourth quarter of fiscal 1997 was below a certain amount, the auditors would not look at it. He also believed that Deloitte & Touche would not challenge the profit recognized on the $3.51 million portion of the barter transaction because of the cash payment.

Crawford also realized that Deloitte would maintain that no profit should be recorded on the $1.64 million balance of the December 29, 1997, transaction with the barter company for which North Face would be paid exclusively in trade credits. However, Crawford was aware of the materiality thresholds that Deloitte had established for North Face’s key financial statement items during the fiscal 1997 audit. He knew that the profit margin of approximately $800,000 on the $1.64 million portion of the December 1997 transaction fell slightly below Deloitte’s materiality threshold for North Face’s collective gross profit. As a result, he believed that Deloitte would propose an adjustment to reverse the $1.64 million transaction but ultimately “pass” on that proposed adjustment since it had an immaterial impact on North Face’s financial statements. As Crawford expected, Deloitte proposed a year-end adjusting entry to reverse the $1.64 million transaction but then passed on that adjustment during the wrap-up phase of the audit.

In early January 1998, North Face recorded the remaining $2.65 million portion of the $7.8 million barter transaction. Crawford instructed North Face’s accountants to record the full amount of profit margin on this portion of the sale despite being aware that accounting treatment was not consistent with the authoritative literature. Crawford did not inform the Deloitte auditors of the $2.65 million portion of the barter transaction until after the 1997 audit was completed.

The barter company ultimately sold only a nominal amount of the $7.8 million of excess inventory that it purchased from North Face. As a result, in early 1999, North Face reacquired that inventory from the barter company.

Audit Considerations

The auditors did not learn of the January 8, 1998, transaction until March 1998. Thus, when the auditors made the materiality judgment for the fourth quarter transaction, they were unaware that a second transaction had taken place and unaware that Crawford had recognized full margin on the second barter transaction.

In mid-1998 through 1999, the North Face sales force was actively trying to resell the product purchased by the barter company because the barter company was unable to sell any significant portion of the inventory. North Face Page 494finally decided, in January and February 1999, to repurchase the remaining inventory from the barter company. Crawford negotiated the repurchase price of $690,000 for the remaining inventory.

Crawford did not disclose the repurchase to the 1998 audit engagement team, even though the audit was not complete at the time of the repurchase.

During the first week of March 1999, the auditors asked for additional information about the barter transaction to complete the 1998 audit. In response to this request, Crawford continued to mislead the auditors by failing to disclose that the product had been repurchased, that there was a guarantee, that the1997 and 1998 transactions were linked, and that the company sales force had negotiated almost all of the orders received by the barter company.

Crawford did not disclose any of this information until he learned that the auditors were about to fax a confirmation letter to the barter company that specifically asked if any of the product had been returned or repurchased. Crawford then called the chair of North Face’s audit committee, to explain that he had withheld information from the auditors. A meeting was scheduled for later that day for Crawford to make “full disclosure” to the auditors about the barter transactions.

Even at the “full disclosure” meeting with the auditors, Crawford was not completely truthful. He did finally disclose the repurchase and the link between the 1997 and 1998 transactions. He did not, however, disclose that there was a guarantee, nor did he disclose that the company’s employees had negotiated most of the orders for the product.

Deloitte & Touche

Richard Fiedelman was the Deloitte advisory partner assigned to the North Face audit engagement. Pete Vanstraten was the audit engagement partner for the 1997 North Face audit. Vanstraten was also the individual who proposed the adjusting entry near the end of the 1997 audit to reverse the $1.64 million barter transaction that North Face had recorded in the final few days of fiscal 1997. Vanstraten proposed the adjustment because he was aware that the GAAP rules generally preclude companies from recognizing revenue on barter transactions when the only consideration received by the seller is trade credits. Vanstraten was also the individual who “passed” on that adjustment after determining that it did not have a material impact on North Face’s 1997 financial statements. Fiedelman reviewed and approved those decisions by Vanstraten.

Shortly after the completion of the 1997 North Face audit, Vanstraten transferred from the office that serviced North Face. In May 1998, Will Borden was appointed the new audit engagement partner for North Face. In the two months before Borden was appointed the North Face audit engagement partner, Richard Fiedelman functioned in that role.

Fiedelman supervised the review of North Face’s financial statements for the first quarter of fiscal 1998, which ended on March 31, 1998. While completing that review, Fiedelman became aware of the $2.65 million portion of the $7.8 million barter transaction that Crawford had instructed his subordinates to record in early January 1998. Fiedelman did not challenge North Face’s decision to record its normal profit margin on the January 1998 “sale” to the barter company. As a result, North Face’s gross profit for the first quarter of 1998 was overstated by more than $1.3 million, an amount that was material to the company’s first-quarter financial statements. In fact, without the profit margin on the $2.65 million transaction, North Face would have reported a net loss for the first quarter of fiscal 1998 rather than the modest net income it actually reported that period.

In the fall of 1998, Borden began planning the 1998 North Face audit. An important element of that planning process was reviewing the 1997 audit workpapers. While reviewing those workpapers, Borden discovered the audit adjustment that Vanstraten had proposed during the prior year audit to reverse the $1.64 million barter transaction. When Borden brought this matter to Fiedelman’s attention, Fiedelman maintained that the proposed audit adjustment should not have been included in the prior year workpapers since the 1997 audit team had not concluded that North Face could not record the $1.64 million transaction with the barter company. Fiedelman insisted that, despite the proposed audit adjustment in the 1997 audit workpapers, Vanstraten had concluded that it was permissible for North Face to record the transaction and recognize the$800,000 of profit margin on the transaction in December 1997.

Borden accepted Fiedelman’s assertion that North Face was entitled to recognize profit on a sales transaction in which the only consideration received by the company was trade credits. Borden also relied on this assertion Page 495during the 1998 audit. As a result, Borden and the other members of the 1998 audit team did not propose an adjusting entry to require North Face to reverse the $2.65 million sale recorded by the company in January 1998.

After convincing Borden that the prior year workpapers misrepresented the decision that Vanstraten had made regarding the $1.64 million barter transaction, Fiedelman began the process of documenting this revised conclusion in the 1997 working papers that related to the already issued financial statements for 1997. The SEC had concluded in its investigation that Deloitte personnel prepared a new summary memorandum and proposed adjustments schedule reflecting the revised conclusion about profit recognition, and replaced the original 1997 working papers with these newly created working papers.

SEC Actions against Crawford

In the SEC action against Crawford and Katz, the SEC charged that Crawford tried to conceal the true nature of the improperly reported transactions from North Face’s accountants and auditors. He made, directly or indirectly, material misrepresentations and omissions to the auditors in an attempt to hide his misconduct. Katz also made, directly or indirectly, material misrepresentations and omissions to the accountants and auditors in an attempt to hide his misconduct.3 

The commission charged that Crawford committed a fraud because his actions violated Section 10(b) of the Exchange Act of 1934, in that he knew or was reckless in not knowing that (1) it was a violation of GAAP to record full margin on the trade credit portion of the sale and (2) that the auditors would consider the amount of the non-GAAP fourth quarter profit recognition immaterial and would not insist on any adjusting entry for correction.

A second charge was that Crawford aided and abetted violations of Section 13(a) of the Exchange Act that requires every issuer of a registered security to file reports with the SEC that accurately reflect the issuer’s financial performance and provide other information to the public.

A third charge dealt with record-keeping and alleged violations of Section 13(b) in that the Exchange Act requires each issuer of registered securities to make and keep books, records, and accounts that, in reasonable detail, accurately and fairly reflect the business of the issuer and to devise and maintain a system of internal controls sufficient to provide reasonable assurances that, among other things, transactions are recorded as necessary to permit preparation of financial statements and to maintain the accountability of accounts.

The SEC asked the U.S. District Court of the Northern District of California to enter a judgment:

  • Permanently enjoining Crawford and the vice president of sales, Katz, from violating Sections 10(b) and 13(b)(5) of the Exchange Act;
  • Ordering Crawford to provide a complete accounting for and to disgorge the unjust enrichment he realized, plus prejudgment interest thereon;
  • Ordering Crawford and Katz to pay civil monetary penalties pursuant to Section 21(d)(3) of the Exchange Act; and
  • Prohibiting Crawford and Katz from acting as an officer or director of a public company pursuant to Section 21(d)(2) of the Exchange Act.

Crawford agreed to the terms in a settlement with the SEC that included his suspension from appearing or practicing before the commission as an accountant for at least five years, after which time he could apply to the commission for reinstatement.


  1. Use the fraud triangle to analyze the red flags that existed in the case and the role and responsibilities of the auditors at Deloitte & Touche in The North Face accounting fraud.
  2. Identify the general principles that dictate when revenue should be recorded. How did North Face violate those rules? 
  3. Page 496Evaluate the actions of Deloitte & Touche first proposing an audit adjustment on the $1.64 million balance of the December 29, 1997, transaction with the barter company and then passing on the adjustment based on it not having a material effect on the financial statements. In this regard, should auditors conceal materiality levels from audit clients? 


Should auditors conceal materiality levels from audit clients?

Please refer to the detailed instructions attached to develop this essay for a Business & Corporate Finance course. It needs to be based on Chevron company. Also attached is a Financial Statement and Ratios Analysis paper on this company that will aid you with this assignment. Please review it as you may find it helpful.

It is due on Sunday to me by 6:00pm. This will allow me time to review & edit if necessary prior to the 11:59pm deadline. Please include the following on the cover page.



Equity Analysis Recommendation & Valuation Paper

BSA409-B733-SP18-Business and Corporate Finance

Tanesha Lockett

Professor, Alan Zarse

June 17, 2018

NOTE: Below is the university school link, which has the same detailed instructions for this paper as shown in the attachments. I will provide the username & password to the site once a tutor has been confirmed.






BSA409-B733-SP18-Business and Corporate Finance

Tanesha Lockett

Professor, Alan Zarse










In 1879, oil was discovered in Pico Canyon, California which then led to the formation of Pacific Coast Oil Company, the most seasoned ancestor of Chevron Corporation. From that point forward, we joined with different organizations a few times, and our organization's name has changed more than once. In 1911 the Standard Oil of California or SoCal was shaped in the midst of the antitrust separation of John D. Rockefeller's Standard Oil organization. The Gulf Oil and the Standard Oil in California consolidated in 1984 forming on of the biggest mergers at the time. SoCal changed its name to Chevron Corporation.

Chevron Corporation consists of 28 subsidiaries and 265 executives. The corporation is headed by Boards of directors whose head is the chairman, Michael Wirth, who is also the Chief Executive Officer of the organization. Under the is the Chief Finance Officer(CFO), under him, are the executives in corporate secretary and chief governance officer, below this arm, is executive vice president downstream and chemicals, under them, is the executive vice president, in charge of projects, technology, services etc. followed by the upstream executive vice president, vice president responsible for corporate Business development, under this arm is the Human resources arm made of Ombuds and Diversity, Medical and Global Health. These arms are still divided into smaller organizational structures.

Michael K. Wirth, 57, is the Chief Executive Officer (CEO) and board chairman of the Chevron Corporation.  The Corporation’s Board of Directors put him in charge of these positions in September 2017. He assumed the roles on February 1, 2018. Prior to his present responsibilities, Wirth worked as the board’s vice chairman in 2017 and official VP responsible for Development and Midstream for the Corporation from 2016 – 2018. As part of his role as VP he supervised the exchanging and supply, transportation, power and pipeline working units, and also corporate procedure; company advancement; not forgetting strategy, and open undertakings. In 2017 he earned an annual compensation of $11.7 million. This compensation includes a $1.2 million basic salary on top awards received for his stocks.  $350,000 was paid to him by Chevron to bolster security at his home and about $16,000 for a medical checkup and related costs.

The Chief Financial Officer of Chevron Corporation is Ms. Patricia E. Yarrington. She is also its Vice President.  Before assuming these roles, she worked as the President of Chevron Canada Ltd., In the Chevron Products Co., Inc. where she worked as a Comptroller, she was also the principal of Chevron Research and Technology Co., and also served as the Principal for Chevron U.S.A. Creation Co. She was on the board of Chevron Phillips Chemical Co. LLC as well as that of the Federal Reserve Bank of San Francisco. She attended Pomona college where she was got her college degree and later on attended the Kellogg School of Management where she received her MBA. By the end of 2016 she earned up to a total of $6.5 million in compensation.

Pierre R. Berber (51): is the Executive Vice President, Downstream & Chemicals: he has held the position since January 2016. He is in charge of coordinating the organization's overall assembling, advertising, ointments, chemicals and Ornate added substances organizations. He likewise directs Chevron's joint-wander Chevron Phillips Chemical Company.

Mary A. Francis 51 is a Chief Governance Officer as well as a Corporate Secretary since 2015. She gives guidance to senior administration and top management on administration issues, deals with the organization's administration capacity and is part of the Law Function Executive Committee. Likewise, she fills in as secretary of the Board, Board Nominating and Governance Committee, and the Executive Committee. Francis joined the corporation’s Law Department as a senior trademark guide in 2002. In 1986, she attended Mount Holyoke College where she received her economics bachelor’s degree. She then joined the College of William and Mary in 1990 where she got a Juris Doctor degree. In 2006, she graduated from the Haas School of Business at the University of California, Berkeley with a degree in business organization.

Joseph C. Geagea 58 is the Technology, Projects and Services Executive Vice President since June 16, 2015. Prior to his present role, Mr. Geagea headed the Chevron Gas and Midstream and its Corporate. He also served as Vice President at Chevron Corporation from January 1, 2012, until 2013. He worked in Chevron Asia South Ltd. as a Managing Director, as well as Chevron Asia Pacific Exploration, and Production Company. From 2008 through 2011, he was the Asia South Business Unit’s Managing Director. He joined Chevron International Exploration and Production Company in 1982. When Texaco and Chevron merged in 2001, Mr. Geagea spear headed the reconciliation of the organizations’ activities. By 2016 Mr. Geagea earned a total of $7.9 million in compensation.

Mr. Mark A. Nelson, is the Midstream, Strategy, and Policy Vice President at Chevron Corp. He is also a Member of Singapore Economic Development Board. He is on the Board of Directors at Canadian Association of Petroleum Producers. Mr. Nelson was beforehand hired as a President by Canadian Council of Chief Executives and a President by Chevron Canada Ltd. He attended California Polytechnic State University (San Luis Obispo).

Mr. Clay Neff heads the Africa Exploration & Production at Chevron Corp. and Chairman & Managing Director at Chevron Nigeria Ltd.

Ms. Maria Lindenberg is the Chief Procurement Officer of Chevron Corp as well as the Vice President of the corporation. She is also a member of the Institute for Supply Management’s Board of Directors.

Mr. James W. Johnson is the Senior Vice President of the corporation’s Upstream Division. He attended the University of Illinois, and later Louisiana State University where he got his MBA. He earned $9.4million in compensation by the end of 2016

Mr. Stephen W. Green heads the Asia Pacific Exploration and Production. Mr. Green is on the Board of Directors at The First Tee. Mr. Green was already working as CEO by Unocal Thailand and head of PT Chevron Pacific Indonesia. He got his college degree from Texas A&M University.

A diagrammatic illustration of Chevron corporation 5yr historical stock price.

Description: C:\Users\Evans\AppData\Local\Microsoft\Windows\INetCache\Content.Word\CVX-price-chart.jpeg

A high debt equity ratio implies that an organization has been aggressively financing itself with debts. In 2017, Chevron had a debt-equity ratio of 20.7% compared to 24.1% and 20.2% percent of 2016 and 2015, respectively.

Return on equity: measures the net salary returned as a level of investors value. It measures the profit the organization has made by uncovering looking at how much profit the shareholders’ investment has generated.

The current ratio calculates a company’s ability to cover its short-term liabilities using its current assets. Chevron Corporation present current ratio weakened in 2015 through 2016 then marginally increased in 2016 through 2017.

Acid Test Ratio. It refines current rate by measuring the number of current liquid assets available to cover liquid liabilities. A quick ratio more than 1.0 implies that an organization is adequately ready to meet its transient commitments. Chevron Corporation’s quick ratio drastically reduced in 2015 through 2016 but then improved slightly in 2016 through 2017.

Ratio of the cash: it's calculated by adding cash and short marketable investment then the total is divided by current liabilities. Chevron Corporation's ratio of cash reduced in 2015 through 2016 and in 2016 through 2017.

Net profit margin; this indicates the profit the company makes. It's calculated by dividing the income by revenue. Chevron Corporation net profit margin deteriorated in 2015 through 2016 but then improved in 2016 through 2017.

Cash Conversion cycle (CCC): This cycle is critical because it shows how a company can efficiently manage its working capital assets and it also exposes a company's ability to pay off its current liabilities. Chevron Corporation Days Sales for the three months ended in Mar. 2018 was 40.01. The three months Day Inventory ended in Mar. 2018 was 20.94. The three months Days Payable ended in Mar. 2018 was 51.77. Therefore, Chevron Corp's (CCC) for the three months ended in Mar. 2018 was 9.18.

Profit Margin analysis: Here we will look at the corporation’s operating profit, net quarterly and historical gross profit margin for the last ten years. Chevron’s net profit margin as of May 08, 2018 is 6.95%.

Debt ratio; we divide total debt by total debt plus shareholders' equity to find out the debt ratio. Chevron company’s debt ratio proportion weakened in 2015 through 2016 however then enhanced in 2016 through 2017 not achieving 2015 level.

Return on assets: Return on assets is measured by dividing the Net Income by its Total Assets. Chevron 's annual return on assets for the March 2018 quarter was 5.70%

Fixed-asset turnover includes the ratio of sales (on the profit and loss account) to the company’s fixed asset value (on the balance sheet). Businesses use it to determine how well the company is using its fixed assets to generate revenue. Revenue for the three months ended in Mar. 2018 was $35,968 million. Chevron Corporation’s Total Assets for the March. 2018 quarter was $255,124 million. Therefore, Chevron Corporation's asset turnover for the Mar. 2018 quarter was 0.14.

The main competitors to Chevron corporation are; Exxon Mobil, Valero Energy, BP. Suncor Energy(SU), Phillips 66(PSX), Conoco Philips(COP). Comparing performance to its competitors, Chevron reported increase in Total Revenue in the one quarter in 2018 by 12.99 % year against year. The corporation has achieved higher profitability than its rivals with a net margin of 9.69 %
The increase in revenue was below Chevron's rivals average revenue increment of 17.48 %, recorded in the March 2018 quarter. . Exxon Mobil is however observed to be the most extraordinary one. Since, despite the Global monetary condition, trailed by low unrefined petroleum value, it has demonstrated the perfection of both its financial and operational perspectives.

The Brand Finance report ranked Chevron Corporation 63rd. Its image esteem is still $17.822 billion. It remains as the fifth most prominent organization in the oil and part on the planet. Poor financials: The Debt Increment: The aggregate obligation and capital rent commitments were $38.6 billion in December 2015 which was an increase from $27.8 billion from FY 2014.

All together for an organization to enhance its hierarchical structure, it is significant to create an appropriate departmental order stream outlines to everybody with the goal that the directors and their duties are comprehended by everybody. At the point when the organization builds up a primary leadership process ensure the whole association understands what it entails, and conduct instructional courses on work process if necessary. Communication stands out amongst the capable devices the association needs to work with, and correspondence in regards to the stream of data and the structure of the organization can lessen perplexity and streamline the procedure. Despite the positive cash related results in the last quarter, this further demonstrates that the association isn't changing according to the alterations in the oil business. Regardless, from a profit perspective, Chevron is seen as an engaging stock.


Our DCF examination demonstrates that the stock is exchanging at a reasonable cost in the construct situation, which is situated in light of a very hopeful rate of income development in the conjecture time frame. The forceful case sets an upside opportunity up to 30%.



Amigobulls. “Best Stocks To Buy - Top Tech Stocks.”, Amigobulls Inc (US), 2018,

N. (n.d.). Chevron Corporation Common Stock Historical Stock Prices. Retrieved May 13, 2018, from

Chevron Corporation - Company Profile, Information, Business Description, History, Background Information on Chevron Corporation Read more: Http:// (n.d.). Retrieved May 14, 2018, from

Root, G. N. (2017, September 26). Recommendations for Improving an Organization's Structure. Retrieved May 14, 2018, from

Bashin, H. (2018, January 13). SWOT Analysis of Chevron. Retrieved May 13, 2018, from

“The Organisational Chart.” Www,, 4 Apr. 2018,

“Stock Analysis on Net.” 100 US Stock Market Leaders, 10 May 2018,

M. (2018, May 13). NYSE: CVX - Chevron Stock Price, Price Target & More. Retrieved May 14, 2018, from






Equity Analysis Recommendation and Valuation Paper

Project Description:

Task 1: For a selected organization, identify primary and secondary sources of data concerning costing, pricing and investment decision-making techniques. Use business presentation tools to construct a presentation to communicate your data, results and conclusions to an appropriate audience. 

- Choose and plan appropriate survey methods, sampling techniques and questionnaires and collect data;

- Explain how appropriate accounting techniques support effective decision-making, including pricing and investment decisions. In so doing, you should explain budgets, calculations of unit cost, selected investment appraisal techniques and identify the sources of finance available to a business.

Task 2: For your selected organization, use financial and management accounting techniques to explain, record and interpret financial data, financial statement and presentation of budgets. Your response should feature:

- comparison of different types of financial statement and their appropriateness for different types of business.

- Explanation and application of management accounting techniques to classify and calculate costs; to prepare budgets for your selected organization. In your response, you should:

- classify different types of cost.

- use different costing methods for tour calculations.

- select appropriate budget methods for preparation of a budget.

Task 3: For a selected organization:

- Explain the elements of the marketing concept and processes and their relation to the costs and benefits of its marketing orientation.

- Propose segmentation, targeting and positioning criteria for its products and/or services in response to existing marketing problems/issues.{For example: how would 2 major retail organizations such as Tesco or Marks and Spencer respond to their problems?}

- Differentiate between the marketing mix and the extended marketing mix, and explain the role of the marketing mix in sustaining competitive advantage.

Combined Assignment 1: Business Accounting, Business Analysis and Principles of marketing.


Southern New Hampslife University

ACC 202 Final Project Guidelines and Rubric


Successful entrepreneurs understand all aspects of business, especially costs and costing systems. Managerial accounting provides a framework for strategic analysis and planning with regard to cost behaviors and costing systems. In this final project, you have the opportunity to act as an entrepreneur and apply managerial accounting principles to evaluate and manage costs related to your products within a costing system. Additionally, you will demonstrate your ability to communicate your findings effectively to internal stakeholders, just as an actual business owner would need to do.

Specifically, you will assume the role of the owner of a hypothetical small business. In your milestone work, you will develop financial strategies prior to opening your business. For the final submission, you will create a presentation for your investors after your business has been in operation for a certain period of time. You will use the provided scenarios to complete your project. The project is divided into three milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final submissions. These milestones will be submitted in Modules Two, Four, and Five. The final product will be submitted in Module Seven.

In this assignment, you will demonstrate your mastery of the following course outcomes:

·         ACC-202-01: Apply fundamental costing systems to optimize operations within a business

·         ACC-202-02: Assess financial performance to communicate financial planning strategies to internal stakeholders

·         ACC-202-03: Leverage fundamental managerial accounting methods to support the mission of an organization


In a detailed presentation (12 to 15 slides in length, plus speaker notes and an addendum), explain and defend your costing strategies (i.e., the business plan created in your first and second milestones) and share your business's performance to-date (i.e., the work from your third milestone). Be sure to effectively communicate to your stakeholders by breaking down concepts and using investor-friendly language to build their trust and confidence.

Specifically, the following critical elements must be addressed. Most of the critical elements align with a particular course outcome (shown in brackets).

    I.      Introduce your presentation

A.      Outline your company's profile, including its name, location, and mission and vision.

B.      Explain for your investors the purpose of the presentation. What do you plan to communicate, and why should your investors pay attention? In other words, try to persuade your investors that the accounting information you are about to share is important. [ACC-202-03]

C.      Explain and defend your methods for generating the information that you are about to share in terms of your adherence to industry standards and the AICPA code of ethics. In other words, why should your investors trust that you are delivering accurate financial data and that your decision-making process has been ethical? [ACC-202-03]



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D.      Specifically, be sure to illustrate how your managerial accounting methods support the mission of your organization, using examples. [ACC-202- 03]

II.         Financial Strategy: Review your original business plan and costing strategies using the prior-to-opening scenario information.

A.      Justify your use of job order costing. Be sure to compare and contrast the various costing systems you learned about in this course as part of your defense. [ACC-202-01]

B.      Explain and defend the selling prices that you established for grooming, day care, and boarding. Be sure to reference your cost-volume-profit analysis in your defense. [ACC-202-02]

C.       Explain and defend your selected target profits for each area of your business. Be sure to reference your cost-volume-profit analysis in your defense. [ACC-202-02]

D.      Explain and defend your contribution margin per unit and contribution margin ratio. Be sure to reference your cost-volume-profit analysis in your defense. [ACC-202-02]

III.         Financial Statements: Assess your financial performance to-date using the post-opening scenario information.

A. Financial Statements

1.        Share the statement of cost of goods manufactured and logically interpret the business's performance against the provided benchmarks. [ACC-202-02]

2.Share the income statement and logically interpret the business's performance against the provided benchmarks. [ACC-202-02] B. Variance Analysis

3.        Identify all variances for the direct labor time and the materials price. [ACC-202-02]

4.        Evaluate the significance of the variances in terms of the potential to impact future budgeting decisions and planning. [ACC-202-02]

IV.        In an addendum, submit your completed workbook, including the following:

A.      Accurately classify all of your costs in the "Cost Classification" tab. [ACC-202-01]

B.      Conduct a cost-volume profit analysis:

1.        Determine your contribution margin per unit and contribution margin ratio in the "Contribution Margin Analysis" tab. [ACC-202-01]

2.        Determine your break-even points for achieving your target profits in the "Break-even analysis" tab. [ACC-202-01]


Milestone One:First Part of Workbook

In Module Two, you will submit the "Cost Classifications" and "Variable_Fixed" tabs in your provided final project workbook. This milestone will be graded with the Milestone One Rubric.



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Milestone Two: Second Part of Workbook

In Module Four, you will submit the "Contribution Margin Analysis" and "Break-even Analysis" tabs in your provided final project workbook. This milestone will be graded with the Milestone Two Rubric.

Milestone Three: Final Workbook

In Module Five, you will submit "COGM Schedule," "Income Statement," and "Variances" tabs in your provided final project workbook. This milestone will be graded with the Milestone Three Rubric.

Final Submission: Presentation to Investors

In Module Seven, you will submit your final project. It should be a complete, polished artifact containing all of the critical elements of the final prompt. It should reflect the incorporation of feedback gained throughout the course. This submission will be graded with the Final Project Rubric.




Module Due



Cost Classification Tabs


Graded separately; Milestone One Rubric


Financial Scope of the Business Plan


Graded separately; Milestone Two Rubric


Draft Presentation to Investors


Graded separately; Milestone Three Rubric


Final Submission: Presentation to Investors


Graded separately; Final Project Rubric

Final Project Rubric

Guidelines for Submission: Your presentation to investors must be at least 12-15 slides plus speaker notes, and all citations should follow APA formatting.

Critical Elements

Exemplary (100)

Proficient (85)

Needs Improvement (55)

Not Evident (0)


Introduce: Company's

Meets "Proficient" criteria and

Outlines the company's profile,

Outlines the company's profile

Does not outline the company's



judiciously includes details

including its name, location, and

but fails to include its name,




relevant to the target audience

mission and vision

location, and mission and vision




of the presentation







Southern New Hampslife University

Introduce: Purpose

Meets "Proficient" criteria and

Explains the purpose of the

Explains the purpose of the

Does not explain the purpose of



demonstrates nuanced

presentation, including a

presentation, but fails to fully or

the presentation



appreciation for the role of

persuasive case for the

persuasively make a case for the




managerial accounting in

importance of the accounting

importance of the accounting




ethically supporting the mission

information to be shared





of an organization





Introduce: Defend of

Meets "Proficient" criteria and

Explains and defends the

Explains the methods for

Does not explain the methods



demonstrates nuanced

methods for generating the

generating the information in the

for generating the information in



appreciation for the role of

information in the presentation

presentation, but fails to fully

the presentation



managerial accounting in

in terms of their adherence to

defend the methods in terms of




ethically supporting the mission

industry standards and the AICPA

their adherence to industry




of an organization

code of ethics

standards and the AICPA code of









Introduce: Support

Meets "Proficient" criteria and

Illustrates how the managerial

Discusses how the managerial

Does not discuss illustrate how


the Mission

demonstrates nuanced

accounting methods support the

accounting methods support the

the managerial accounting



appreciation for the role of

mission of the organization using

mission of the organization, but

methods support the mission of



managerial accounting in

specific examples

fails to fully or accurately

the organization



ethically supporting the mission


illustrate using specific examples




of an organization





Financial Strategy:

Meets "Proficient" criteria and

Justifies the use of job order

Discusses the use of job order

Does not discuss the use of job


Costing Systems

demonstrates keen insight into

costing by comparing and

costing but fails to fully or

order costing



key cost behaviors and cost

contrasting the various costing

accurately justify its use by





systems covered in the course

comparing and contrasting the






various costing systems covered