Frustrated by not being able to find a pair of red cowboy boots in her size, a Florida woman, who works as a bookkeeper, and her out-of-work husband decide to open their own business. Although the store manages to earn a small profit, early sales returns dampen the couple's enthusiasm. Now they...

Three exercises related to stockholders' equity are presented. Students are asked to record transactions, and then consider their effect on the financial statements. The exercises include the issuance of common and preferred stock, payment of dividends, repurchase and reissue of stock, stock...

This case provides students the opportunity to practice variance analysis for an annual operating plan using flexible budgeting skills. First, a static budget is flexed to account for changes in product volume. Then, actual results are compared to the flexed budget and analyzed for product...

Prudential Financial was a financial-services company whose stock value has declined due to the financial crisis that took hold of the markets in 2008 and to investor concerns regarding the financial leverage of financial-services companies during this time. Prudential's balance sheet, income...

Alex Pearson, manager of Charley's Family Steak House number two, is preparing for his upcoming meeting with Charley Turner, owner of the steak house. The purpose of the meeting is to discuss the restaurant's 2004 results, how they compared to budget, and how Pearson performed during his second...

Breeden Electronics USA is a start-up division of a German company. It plans to produce two products, both electronic signaling devices. Herman Klein, the division president, has asked his controller, Marlene Baer, to compute several breakeven sales figures as they assess the sales level that is...

After thinking through the situation in which an employee had given inaccurate information, thus alienating a client, the senior partner of the accounting firm ultimately decides to take no action against the employee. Having opted not to create a stir within the company or between the company...

Alex Pearson has just completed his first year as manager of Charley's Family Steak House number two. Actual profit for the year was well below budgeted profit. Pearson is preparing for a meeting with Charley Turner, the restaurant's owner, to discuss the 2003 operating results and Pearson's...

This technical note discusses accounting for stock options. It includes a discussion of the business considerations in issuing stock options, the evolution of accounting for stock options, accounting for stock options using the intrinsic-value method and the fair-value method under U.S. GAAP,...