Interpreting Financial Statements

Interpreting Financial Statements

Team A

ACC400

February 11, 2013

Resources: Financial Accounting: Tools for Business Decision Making and Managerial Accounting: The Basis for Business Decisions

Prepare responses to the following assignment from the e-texts:

Ch. 13: Communication Activity: BYP 13-7 of Financial Accounting: Tools for Business Decision Making

* Note: Include a 350- to 700-word memo addressing the problem in BYP 13-7.

*

COMMUNICATION ACTIVITY

Page 702

Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2007). Financial accounting: Tools for business decision making (4th ed.). Hoboken, NJ: John Wiley & Sons.

BYP13-7 R.J. Falk is the chief executive officer of Ventura Electronics. Falk is an expert engineer but a novice in accounting. Falk asks you, as an accounting major, to explain (a) the bases for comparison in analyzing Ventura financial statements and (b) the limitations, if any, in financial statement analysis.

Instructions

Write a memo to R.J. Falk that explains the basis for comparison and the factors affecting quality of earnings.

MEMORANDUM

TO: R.J. Falk, CEO

FROM: Team A Consultants, LLC

DATE: February 11, 2013

SUBJECT: Financial Statement Analysis

CC: Board of Directors

In response to your request to analyze Ventura Electronics’ financial statements, Team A Consultants will explain the basis for comparison and any limitations to include factors affecting quality of earnings.

The financial statement contains pertinent information about Ventura Electronics, such as the financial status of the business and indications of where changes, if required should be made. These statements contain significant data that investors and stockholders can use to gauge the health of your organization. Understanding and staying knowledgeable will help Ventura Electronics’ remain in compliance with the ethical standards of accounting rules and ensure the future of your business.

The...