To demonstrate an understanding of an accounting issue covered in this course, each student must submit a writing assignment. Carefully review the instructions below and select one case from the following page. Prepare a 2-3 page discussion (double-spaced).
Format
Essay 2-3 pages Double-Spaced
Bibliography
Each essay should be prepared using general guidelines for composing an essay. Your essay should address all questions asked in each scenario. Failure to address questions outlined in each case will result in a reduction to the content portion of your essay.
Guidelines are given below to help organize your essay. Failure to follow the given guidelines, including the format outlined above, will result in a reduction to the organization/grammar portion of your essay.
Introductory Paragraph - Provides a general discussion of the topic and a thesis statement stating what will be discussed in the body of the essay. Start general and then get to the specifics of the case. Your opening sentence should not simply repeat the facts of the case. For the purposes of this project, do not discuss your conclusion in the introduction.
Body of the Essay - Speaks specifically to the issues of each case. Each paragraph should have an opening sentence that states the main idea of the paragraph. Subsequent sentences should build upon the main idea of the paragraph.
Conclusion - Summarizes the body, concisely restates the discussion, and reaches a final decision, if necessary.
Grading & Submission - There are 25 points possible for this assignment. Your project will be evaluated in the following manner: 50% - content and 50% - organization, clarity, and grammar. Your project is to be submitted in the following manner to avoid reduction to your organization grade. An electronic transmission of your project must be submitted by the due date to the Dropbox in E-Companion (please save your file as Your Last Name First Name Company Selected)
Sources
Your textbook
Library/Internet (Accounting books, publications, etc.)
You must have at least two sources. You must use at least one source other than your textbook.
Do not plagiarize!! This project must be your own work. You must document all resources used including your textbook in the bibliography. Any word for word references from any source that are not footnoted are considered plagiarism.
Topics
You are the chief loan officer for Big Bank Inc. Twittergram has presented its current income statement and balance sheet to Big Bank to obtain a loan. On the balance sheet, the company has a current ratio of 2.3 and a quick ratio of 1.7. In addition, you requested a credit report that revealed Twittergram has a good credit history. However, you are concerned because the company has reported a net loss for the year totaling $20,000. The net loss includes an extraordinary loss of $60,000 and a loss on the disposal of a business segment of $50,000. These losses are assumed to be one-time-only losses that will affect the current year financial statements and not future years. Define the current and quick ratios and explain what these ratios tell us about Twittergram’s liquidity. For each loss, determine the section of the income statement in which it would appear and briefly define the criteria for classifying a transaction with each section. Identify advantages and disadvantages of loaning money to Twittergram. Decide whether you would approve the loan.
Curious George Enterprises, a manufacturer of high tech surveillance equipment, has experienced significant financial growth in the last 4 years and would like to expand. During this time period, cash flow has also increased steadily. The company’s president, whose background is in sales, looked at the statement of cash flows at the last meeting and would like to understand more about the details of the statement of cash flows.
Explain the purpose of the statement of cash flows. Identify the methods of reporting cash flow and the various types of activities and transactions that affect cash flow. Assuming cash flow continues to increase, explain whether there are circumstances in which you would not be willing to expand in spite of the increase in cash flow.