Skip to ContentGo to accessibility pageKeyboard shortcuts menu
OpenStax Logo
Principles of Accounting, Volume 1: Financial Accounting

Thought Provokers

Principles of Accounting, Volume 1: Financial AccountingThought Provokers
Search for key terms or text.
TP 1.

LO 10.1Search the SEC website (https://www.sec.gov/edgar/searchedgar/companysearch.html) and locate the latest Form 10-K for a company you would like to analyze. When you are choosing, make sure the company sells a product (has inventory on the balance sheet and cost of goods sold on the income statement). Submit a short memo that states the following:

  1. The name and ticker symbol of the company you have chosen.
  2. Answer the following questions from the company’s statement of Form 10-K financial statements:
    • What amount of merchandise inventory does the company report on their balance sheet?
    • What amount of cost of goods sold does the company report on their income statement?

Provide the weblink to the company’s Form 10-K, to allow accurate verification of your answers.

TP 2.

LO 10.2Assume your company uses the periodic inventory costing method, and the inventory count left out an entire warehouse of goods that were in stock at the end of the year, with a cost value of $222,000. How will this affect your net income in the current year? How will it affect next year’s net income?

TP 3.

LO 10.3Search the internet for recent news items (within the past year) relating to inventory issues. Submit a short memo describing what you found and explaining why it is important to the future of inventory accounting or management. For example, this can be related to technology, bar code, RFID, shipping, supply chain, logistics, or other inventory-related topics that are currently trending. Provide the weblink to the source of your information.

TP 4.

LO 10.3Search the internet for information about the technological breakthrough relating to inventory issues, referred to as the Internet of Things (IoT). How do you think the development of such technology will change the way accountants manage inventory in the future? Provide the weblink to the source or sources of your information.

TP 5.

LO 10.4Consider the dilemma you might someday face if you are the CFO of a company that is struggling to satisfy investors, creditors, stockholders, and internal company managers. All of these financial statement users are clamoring for higher profits and more net assets (also known as equity). If at some point, you suddenly found yourself not meeting the internal and external earnings and equity targets that these parties expect, you would probably search for some way to make the financial statements look better. What if your boss, the CEO, suggested that maybe you should make just one simple journal entry to record all the goods that your company is holding on consignment, as if that significant amount of goods were owned by your company? She might say that this action on your part would fix a lot of problems at once, since adding the consigned goods to merchandise inventory would simultaneously increase net assets on the balance sheet and increase net income on the income statement (since it would decrease cost of goods sold). How would you respond to this request?

Write a memo, detailing your willingness or not to embrace this suggestion, giving reasons behind your decision. Remember to exercise diplomacy, even if you must dissent from the opinion of a supervisor. Note that the challenge of the assignment is to keep your integrity intact while also keeping your job, if possible.

TP 6.

LO 10.5Use a spreadsheet and the following excerpts from Hileah Company’s financial information to build a template that automatically calculates (A) inventory turnover and (B) number of days’ sales in inventory, for the year 2018.

Table showing the following for 12/31/18 and 12/31/17, respectively: Cash plus Accounts Receivable plus Merchandise Inventory equals Total Assets. Accounts Payable plus Common Stock plus Retained Earnings equals Total Liabilities and Equity. Additional information: Cost of Goods Sold 12/31/18: $10,000, 22,000, 15,900, 47,900, 4,500, 10,000, 33,400, 47,900, 177,000. 12/31/17: $14,000, 17,000, 14,200, 45,200, 5,500, 10,000, 29,700, 45,200.
TP 7.

LO 10.5Search the SEC website (https://www.sec.gov/edgar/searchedgar/companysearch.html) and locate the latest Form 10-K for a company you would like to analyze. Submit a short memo that states the following:

  1. The name and ticker symbol of the company you have chosen.
  2. Describe two items relating to inventory from the company’s notes to financial statements:
    • one familiar item that you expected to be in the notes to the financial statement, based on this chapter’s coverage; and
    • one unfamiliar item that you did not expect to be in the notes to the financial statements.
  3. Provide the weblink to the company’s Form 10-K, to allow accurate verification of your answers.
PreviousNext
Order a print copy
Citation/Attribution

This book may not be used in the training of large language models or otherwise be ingested into large language models or generative AI offerings without OpenStax's permission.

Want to cite, share, or modify this book? This book uses the Creative Commons Attribution-NonCommercial-ShareAlike License and you must attribute OpenStax.

Attribution information
  • If you are redistributing all or part of this book in a print format, then you must include on every physical page the following attribution:
    Access for free at https://openstax.org/books/principles-financial-accounting/pages/1-why-it-matters
  • If you are redistributing all or part of this book in a digital format, then you must include on every digital page view the following attribution:
    Access for free at https://openstax.org/books/principles-financial-accounting/pages/1-why-it-matters
Citation information

© Jul 16, 2024 OpenStax. Textbook content produced by OpenStax is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike License . The OpenStax name, OpenStax logo, OpenStax book covers, OpenStax CNX name, and OpenStax CNX logo are not subject to the Creative Commons license and may not be reproduced without the prior and express written consent of Rice University.