Due Date: 10/22/20 @11:59pm Please respond to each question in your own words and do not copy word for word a definition from the book or any online source. Use your own words. Remember this is...

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Due Date: 10/22/20 @11:59pm



Please respond to each question in your own words and do not copy word for word a definition from the book or any online source. Use your own words. Remember this is ‘analysis’ so not necessarily a right or wrong answer but instead using your own thoughts and judgement to supportyourstatement.



Question #1 -Describe the difference between the Income Statement and the Balance Sheet. Yes, we know that the Income Statements shows revenues and expense accounts and shows profitability and the Balance Sheet houses all assets, liabilities, and equity accounts. I want you to dig beyond this basic information and describe the inherent use and purpose of both. What is the real difference between the two and what information does it provide users? Why can’t companies just prepare one or the other?(Use your own words – do not copy word for word from the text or any other source).






Question #2 -Why should caution be exercised in the use of the net income figure derived in the Income Statement?






Question #3 -An Accounting student – Tyler, is just taking Intro to Accounting for the first time. Tyler is confused with the difference between revenues and gains and expenses and losses. Unfortunately, Tyler is using the terms revenues and gains and expenses and losses interchangeably. How would you describe the difference between revenues vs gains and expenses vs losses to Tyler to help him understand better?






Question #4 -Why is there a need to distinguish between the operating section and non-operating section in the Income Statement? What is the basis for distinguishing between the two?






Question #5 -Identify at least two situations in which applying different accounting methods or accounting estimates results in difficulties in comparing companies’ Income Statement.






Question #6 -In class, we discussed creative methods that companies can strategize to essentially manipulate their numbers. Considering these strategies and discussions, describe in detail how a company can leverage the following Accounting topics as a strategy tool to manipulate their Income Statement:



NB: Keep in mind that you are not merely providing definitions of each. Instead, describe things like the loopholes that exist, how can companies jump through these loopholes, and what impact this have on their Income Statement (yes Income Statement specifically).



a)Loss Contingencies


b)Warranties


c)Inventory Valuation


d)Depreciation






Question #7Describe what ‘loss contingencies’ are. Should Loss Contingencies should be accrued and reported on the ‘face’ of the financial statements? How are gain contingencies treated and reported? Why?




Question #8
RESEARCH: Do a little digging and research. Describe the ongoing ‘Trump Tax’ debacle. What exactly is President Trump ‘accused’ of doing? How did he do it? Identify some of the Accounting implications and concepts involved in this tax situation.






Question #9Considering the story you just researched above in question #8, and also considering the ‘Delta’ article we read, do you think the accounting treatment for net operating losses, carry forwards etc. presents an even playing field for companies that are consistently profitable?Overall, develop arguments for/against NOL’s. Do you believe that the net operating loss carryback/carry forward is a loophole and do you believe that it is JUSTIFIED (FAIR) that businesses get to essentially ‘benefit’ from their losses? NB: Please be as detailed as possible. This question carries a lot of weight so ensure that you write a minimum of 1 paragraph (no more than 3 paragraphs).




Question #10




https://www.wsj.com/articles/apples-guidance-on-its-services-revenue-left-analysts-with-more-questions-11547665611


A Wall Street Journal article noted that Apple reported higher income than its competitors by using a more aggressive policy for recognizing their revenues on future upgrades to its products. Some analysts believe that because of their seemingly aggressive revenue reporting, Apple’s quality of earnings is ‘low’.


A)Read the WSJ article provided. In your own words and in a short few sentences, briefly explain Apple’s new revenue reporting policy.


B)What is meant by ‘quality of earnings’?


C)We are all quite familiar with Apple’s products and Apple the company as a whole. After reading this article, combined with your perception of Apple, if you had to assess and provide an analysis of Apple, would your analysis conclude that Apple’s quality of earnings is low?


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Answered Same DayOct 22, 2021

Answer To: Due Date: 10/22/20 @11:59pm Please respond to each question in your own words and do not copy word...

Yash answered on Oct 22 2021
128 Votes
4.)
There is the need to distinguish between the two since through this, users of the financial statement will be able to know the income attributable to business activity & the income attributable to other activity. Operating cost are the costs and incomes which relate legitimately to the vital movement of the worry; they are incomes acknowledged from, or costs which add to, the offer of products or administrations for which the organization was sorted out. The Non operating cost & revenue result from auxiliary exercises of the organization. They are not straightforwardly identified with the primary action of the organization yet emerge from coincidental exercises.
5.)
A few circumstances where use of various bookkeeping techniques or appraisals lead to examination issues include:
(a) Inventory techniques—LIFO versus FIFO,
(b) Depreciation Methods—straight-line versus WDV,
(c) Accounting for long haul contracts—level of-consummation versus finished agreement,
(d) Estimates of helpful lives or rescue esteems for depreciable resources,
(e) Estimates of awful obligations,
(f) Estimates of guarantee costs.
6.)
a.) Aggressive accounting policies revealing including complex bookkeeping evaluations, for example, Loss contingency, where investors must depend on these decisions. Any vagueness or vulnerability encompassing the likelihood of misfortune when they survey misfortune possibility, particularly at the point when the probability for contingency loss can be made high/low to misled investors.
b.) Accounting of warranties requires management estimate of the future losses that had to be bear on account of the extend of warranty which is highly subjective. Any vagueness in this subjective estimate can manipulate the financials.
c.) Inventory Valuation
This is the most crucial item of balance sheet which can effect the decision making to the maximum as it change in this item can directly affect the profitability of the company. Company can choose the methods of valuation which is suitable for him to show the profits/valuation as desired by them. Further, cost of manufactured goods can easily be manipulated by manipulating the cost sheet.
d.) Depreciation
Depreciation rates are determined by the management based on wear & tear of the assets. These are subjective decisions & hence can easily be manipulated. For example, in case to show more profits, lower rates...
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