Acc400 Week 3 Individual Assignment Essay

Week 3 Individual Assignments ACC/400 Chapter 10 1. Georgia Lazenby believes a current liability is a debt that can be expected to be paid in one year. Is Georgia correct? Explain. Yes Georgia is correct because a current liability is a short-term liability that is to be paid within the accounting cycle which is one year or less. 7. (a) What are long-term liabilities? Give two examples Long term liabilities are company obligations that extend beyond the current year, or alternately, beyond the current operating cycle. Examples are debentures and loans. b) What is a bond? – It is a form of interest-bearing note payable issued by corporations, universities, and governmental agencies. 8. (a) Secured and unsecured bonds – A secured bond is backed by collateral and an unsecured bond is not backed with collateral. Collateral is represented with assets that are surrendered if the bond is not repaid. (b) Convertible and callable bonds – A convertible bond can be converted into stock by an investor and a callable bond is one that can be bought back by the company from the investor before the bond reaches maturity. 9. Valentin Zukovsky says that liquidity and solvency are the same thing. Is he correct? If not, how do they differ? Valentin is wrong. Liquidity is a measure of how easily business assets can be converted to cash and solvency is the amount of profit a business has in comparison to its long-term debt. Ch. 11: Ethics Case: BYP11-10 Greenwood Corporation has paid 60 consecutive quarterly cash dividends (15 years). The last 6 months have been a real cash drain on the company, however, as profit margins have been greatly narrowed by increasing competition.

With a cash balance sufficient to meet only day-to-day operating needs, the president, Gil Mailor, has decided that a stock dividend instead of a cash dividend should be declared. He tells Greenwood’s financial vice-president, Vicki Lemke, to issue a press release stating that the company is extending its consecutive dividend record with the issuance of a 5% stock dividend. “Write the press release convincing the stockholders that the stock dividend is just as good as a cash dividend,” he orders. Just watch our stock rise when we announce the stock dividend; it must be a good thing if that happens. ” Instructions (a) Who are the stakeholders in this situation? The stakeholders will be Greenwood Corporation and the stockholders. (b) Is there anything unethical about President Mailor’s intentions or actions? There’s nothing unethical because when a company is short on cash they issue stock dividends. (c) What is the effect of a stock dividend on a corporation’s stockholders’ equity accounts? Declaring stock dividends has no effect on a corporation’s stockholders’ equity accounts.

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However, the retained earnings account loses its worth while the common stock account and additional paid-in capital account see their amounts increase. Which would you rather receive as a stockholder—a cash dividend or a stock dividend? Why? As a stockholder I would rather receive a cash dividend instead of stock dividend because cash dividends are beneficial, however in that they provide shareholders with regular income on their investment along with exposure to capital appreciation. They are the surest way to build wealth. Ch. 11: Internet Assignment 11-1 Answer the following questions: a.

Does the company report preferred stock in its balance sheet? If so, how many shares are currently outstanding? They don’t report preferred stock in the balance sheet. b. How much common stock does the company report in its most recent balance sheet? What is the par value of each? The company reports 553 common stocks in its most recent balance sheet. c. Does the company report any treasury stock? Has this amount changed since the previous year? Yes the company reports treasury stock and the amount has changed since the previous year. In Jan2012 it reported (4,416,018) and in Jan 2011 it reported (3,786,977).