Question

Assets:
Current Assets:
cash	$100,000
Unclaimed payroll checks	27,500
Securities at cost (fair value $ 30,000)	37,000
Accounts receivable (minus provision for bad debts)	75,000
Inventory (cost or market whichever is lower)	240,000
Total assets	479,500
Tangible assets:
Land (minus accumulated depreciation)	80,000
Buildings (net)	550,000
Net tangible assets	630,000
Total long-term investments:
Stocks and bonds	100,000
Treasury stocks	70,000
Total long-term investments	170,000
Other assets:
Discount on bonds payable	19,400
reserve	975,000
Other total assets	994,000
Total assets	2,273,900

• After your review and careful analysis of the above balance sheet items, you are required to answer the following questions:

2- mention the above balance sheet determinants? clarify with the explanation.

3- Discuss the ethical issue related to the way the above balance sheet was classified?

4- Make your opinion on the completeness and comprehensiveness of the above balance sheet.

Answer 1

2. Determinants are the factors which decisively affects the nature or outcome of something. The given Balance Sheet only shows the assets side and the determinants of the given balance sheet are assets namely current assets, tangible assets, other assets.

3. The ethical issues related to the way of the balance sheet are

1. The presentation of the balance sheet  is not appropriate as the assets in the balance sheet should be presented in 2 ways i.e by representing the liquidity of the assets (i.e by showing the easily liquidated assets on the top of the followed by the fixed assets) and the next way is normal way of presenting assets (i.i. by presenting fixed assets on the top followed by the current assets). The given balance sheet does not present the assets in any of the ways which is an ethical issue and lead to violation of accounting standard.
2. Generally, reserves should are shown in the equity and liablities side of the balance sheet but here the reserves are shown in the assets side of the balance sheet

4. As per my opinion the given balance sheet is not complete and also it is compact by not listing all the assets.