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Financial Reporting Problem Part 2
XACC/290
04/19/2014
Financial Reporting Problem Part 2 2
A. Are the assets included under the company’s current assets listed in the proper order? Explain your answer. Yes, the company’s assets are listed in the proper order. They list the order according to liquidity. The highest liquidity is at the top and the lowest liquidity is at the bottom. Cash is the highest liquidity and things like operations and equipment are the lowest liquidity.
B. How are the company’s assets classified? The company’s assets are classified as total assets, current assets, non-current assets, net fixed assets, and intangible assets.
C. What are cash equivalents? Cash equivalents are the company’s assets that can be turned into cash immediately, which include money market holdings, treasury bills, short-term investments and marketable securities.
D. What are the company’s total current liabilities at the end of its most recent annual reporting period? The total current liabilities at the end of the most recent annual reporting period for Best Buy are $11.3 billion dollars.
E. What are the company’s total current liabilities at the end of the previous annual reporting period? The total current liabilities at the end of the previous annual reporting period for Best Buy are $12.3 billion dollars.
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F. Considering all the information you have gathered, why might this information be important to potential creditors, investors, and employees? All the information above is important to creditors because it helps to determine whether or not to lend money to a company. The creditors will need to go over the income statement, the balance sheet and the statement of cash flows. The creditors can look at the income statement for that company to
Financial Reporting Problem Part 2
XACC/290
04/19/2014
Financial Reporting Problem Part 2 2
A. Are the assets included under the company’s current assets listed in the proper order? Explain your answer. Yes, the company’s assets are listed in the proper order. They list the order according to liquidity. The highest liquidity is at the top and the lowest liquidity is at the bottom. Cash is the highest liquidity and things like operations and equipment are the lowest liquidity.
B. How are the company’s assets classified? The company’s assets are classified as total assets, current assets, non-current assets, net fixed assets, and intangible assets.
C. What are cash equivalents? Cash equivalents are the company’s assets that can be turned into cash immediately, which include money market holdings, treasury bills, short-term investments and marketable securities.
D. What are the company’s total current liabilities at the end of its most recent annual reporting period? The total current liabilities at the end of the most recent annual reporting period for Best Buy are $11.3 billion dollars.
E. What are the company’s total current liabilities at the end of the previous annual reporting period? The total current liabilities at the end of the previous annual reporting period for Best Buy are $12.3 billion dollars.
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F. Considering all the information you have gathered, why might this information be important to potential creditors, investors, and employees? All the information above is important to creditors because it helps to determine whether or not to lend money to a company. The creditors will need to go over the income statement, the balance sheet and the statement of cash flows. The creditors can look at the income statement for that company to
References: Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2009). Financial accounting: Tools for business decision making (6th ed.). Hoboken, NJ: John Wiley & Sons.