Suffolk University Accounting Discussion Questions

1-In February of 2010 the SEC announced a new time line calling for publicly traded companies to switch from GAAP to a different set of accounting standards, called IFRS, by 2015. Now that it is 2017, do some research on the impact this switch will have on US companies. Based on your research, what are the key advantages and major challenges associated with making the proposed switch?

Required: 2 paragraphs outlining the advantages and disadvantages

2-Assume that the president of Freeman Industries, Inc. made the following statement in the Annual Report to Shareholders.

“The founding family and majority shareholders of the company do not believe in using debt to finance future growth. The founding family learned from hard experience during Prohibition and the Great Depression that debt can cause loss of flexibility and eventual loss of corporate control. The company will not place itself at such risk. As such, all future growth will be financed either by stock sales to the public or by internally generated resources.”

Required (1 paragraph each):

1. As a public shareholder of this company, how would you respond to this policy?

2. Give some reasons for a company to use debt financing.

3. Give some reasons for a company to use equity financing

3-Using the company you have chosen for your annual report project, obtain the company’s most recent 10K (Annual Report) and locate the balance sheet and ‘Notes to the Financial Statements’ to answer the following questions:

Required:

1. What types of items are included in the company’s inventory?

2. What is the value of the inventory for the most current year? The previous year?

3. What inventory method or methods does the company use to determine the inventory amount reported on its balance sheet?

4. What percentage of total assets is the company’s inventory for the current year? The previous year? Did this number go up or down? Why?

Tehra Dactyl is an accountant for Skeds, Inc., a footwear and apparel company. The company’s revenue and net income have increased by more than 100% over the past three years. During the same period, Tehra and her colleagues in the accounting department have not received a raise or salary increase. Frustrated by not receiving a raise while the company has thrived, Tehra has begun submitting expense reimbursement for personal purchases. Tehra’s has a good relationship with her supervisor, and he simply “signs off” on Tehra’s expense reimbursements and is “looking the other way” because Tehra has not received a raise in the past three years.

Required: (2-3 sentences each)

1. Do you feel an employee is entitled to a raise each year if the company is doing well?

2. What actions should both Tehra and the supervisor take in this situation?

3. What advice would you give Tehra if she asked your opinion on this situation?

Prof. Angela

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