Essay about Week 2 Team Assignment

Submitted By fcorsi
Words: 947
Pages: 4

a. Name the titles of Home Depot’s financial statement that provide specific information about economic resources, claims to resources and changes in resources and claims.

Economic resources are found at Consolidated Balance Sheet.
Claim to resources are found at Consolidated Balance Sheet.
Changes in resources and claims are found at Consolidated Statement of Cash Flows.

b. Name three other sections from Home Depot’s 2012 financial statement that might be useful to a potential investor or creditor.

Potential investors or creditors may look at Home Depot’s Consolidated Statement of Earnings, the Consolidated Balance Sheet and also the Consolidated Statement of Cash Flows.

a. Did the company have a net income or a net loss for the year? How much?

They had a net income of $4.535B.

b. What were the cash balances at the beginning and end of the year? What were the most important causes of the cash decrease during the year? (Treat “cash equivalents” as it they were cash)

The cash balance at the beginning of 2012 was $1.987B and the ending balance was $2.494B. The cause of the decrease is cash was the repurchased their common stock and cash dividend paid to stockholders.

c. What are the two largest assets and liabilities included in the company’s balance sheet at the end of the year?

Inventory and property and equipment were the company’s two largest assets. The largest liabilities were accounts payable and long-term debt.

a. Does the company’s fiscal year end on December 31? How can you tell?

Home Depot’s fiscal year does not end on December 31. According to the Consolidated Statement of Earning , the company had the following closing dates:
February 3, 2013
January 29, 2012
January 30, 2011

b. Sate the company’s most recent balance sheet in terms of A = L + E.

Balance sheet in terms of Assets= Liabilities + Equity
$41,084 = $23,307 + $17,777

c. Did the company post more debits to the Cash account during the year than credits? How can you tell?

Yes, according to the Consolidated Statement of Cash Flows, the company posted more debits to the Cash account in 2013. Total Net Cash $ 6,975 (debit).

Examine the company’s consolidated balance sheet and identify specific accounts that may have required adjusting entries at the end of the year.

Accrued Salaries and Related Expenses
Other Accrued Expenses
Deferred Revenue
Deferred Income Taxes

a. Does the company use straight-line depreciation? How can you tell?

Straight-line depreciation charges costs evenly through the life of a fixed asset. This method is appropriate where economic benefits from an asset are expected to be realized evenly over its useful life. The straight-line method is useful when no reliable estimate can be made regarding the economic benefit.
Home Depot, Inc., does use straight-line depreciation. They can be seen by looking at the financial statement in Appendix A over the 10-year reporting periods. From year to year there is a consistent trend of depreciation of the assets.

b. At what point does the company recognize and record revenue from its customers?

According the realization principle, revenue should be recognized at the time when goods are sold or services are rendered. Home Depot, Inc. recognizes revenue at the time that the customer takes possession of merchandise or receives services, net of estimated returns and sales tax. If the Company receives payment from customers before a service is rendered or a good is sold, Home Depot, Inc., records the amount received as Deferred Revenue on their Consolidated Balance Sheets until the sale is complete.

c. Use the information from the consolidated financial statements; evaluate briefly the company’s profitability and liquidity.

Home Depot, Inc., is more profitable over the past 5 years because their gross margin has steadily increased. Their cash balance has grown from $1.9B in fiscal year 2011…