Essay about Generally Accepted Accounting Principles and Net Income

742 Words Apr 2nd, 2013 3 Pages
1. Arredondo, Inc. has current assets of $2,170, net fixed assets of $9300, current liabilities of $1350, and long-term debt of $3980. Building a balance sheet for this company, address the following questions:
a. What is the value of the shareholders’ equity account for this firm?
b. How much is net working capital? Arredondo,IncBalance Sheet | Assets Liabilities and Owener`s EquityCurrent assets $2,170 Current liabilities $1350Net fixed assets $9,300 Long-term debt $3980 Shareholders` equity $6140Total assets $11470 Total liabilities and
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The December 31, 2009, balance sheet of Anna’s Tennis Shop, Inc., showed current assets of $1015 and current liabilities of $870. The December 31, 2010, balance sheet showed current assets of $1230 and current liabilities of $905. What was the company’s
2010 change in net working capital? NWC at the end of 2010 was $1230-905=$325 At the end of 2009 was $1015-870=$145
So change in NWC is $325-145=$180 On the other hand, Anna’s Tennis Shop had a net investment of $180 in NWC at 2010

5. In June 2002, Worldcom, the telecommunications giant, surprised investors when it announced that it had overstated net income in the prior two years by $3.8 billion. At the center of the controversy was Scott D. Sullivan, the former CFO. Worldcom had leased telephone lines from local companies with the expectation of reselling the use of the lines at a higher price. Under GAAP, these costs should have been reported as an expense on the income statement. Reportedly, however, Mr. Sullivan ordered that the costs be treated as…