The SEC Form 10-K of NIKE is reproduced in Appendix C.
REQUIRED:
Review the NIKE Form 10-K, and answer the following questions.
a. In terms of the basic accounting equation, explain how NIKE accounts for prepaid expenses. What is the dollar value of prepaid expenses on the 2009 and 2008 balance sheets?
b. In terms of the basic accounting equation, explain how NIKE accounts for accrued liabilities.
c. How much cash did NIKE spend for capital expenditures and dividends during the year ended May 31, 2009? How did these transactions affect the basic accounting equation? How much cash was collected from share issuances through stock options, and how did these transactions affect the basic accounting equation?
d. What is the balance of accounts payable on NIKE's May 31, 2009, balance sheet, and how did it get there?
e. What does NIKE's management say in its management letter about its system of internal controls?
f. (Appendix 4A) Why is depreciation added to net income in the operating section of the statement of cash flows, and why is the increase in accounts receivable subtracted from net income?