Sample Quantum Task (con’t)

1. Sample Quantum Task (con’t) Accounting exists because there are differences between cash flow and wealth flow. Describe this difference using the personal scenario of working and getting paid for your work. Please try to limit your response to no more than six sentences. Task After I finish my work at UNext, I’ll get my paycheck and head to the bank. Now…am I wealthy? If I cash the check and stuff it all in my wallet, I appear to be wealthy because I have so much cash on hand. If I deposit 95% of my check in my bank account and put the remaining 5% in my wallet as cash, I appear to not be as wealthy as if I cashed the entire check. We must look at more than just the cash on hand at the time I get paid, as cash flow does not equal wealth flow. The wealth equation is Resources – Obligations = Wealth. The real answer to whether I am wealthy is determined by my obligations (my UNext check (+ other income sources, assets, bank account) – my rent, expenses, etc. = my wealth. Student Response Your response did not adequately describe the differences between cash flow and wealth flow. Wealth flows to a person when that person earns their pay on an hourly or daily basis, but no cash changes hands at the time it is earned. Cash flows when the company pays the worker, either with currency or some other convertible form such as a check or or transfer of funds. The wages had already been earned, so the person's wealth does not change when the pay is received. Feedback

2. PreMBA Course Structure Course Suite Course Course Course Course Pre-Assessment Problem Assessment Content Assessment Post-Assessment

3. PreMBA Course Approach • Suite and course construction • Learning outcomes • Self assessments • Resources and tools • Course instruction • Facilitating discussion

4. PreMBA Course - Accounting

5. Sample PreMBA Assessments 1. Justin Thompson manages the New York subsidiary of WhiteRiver Telecom. On December 27, 2000, Justin traveled to San Francisco, Calif., to oversee the fiber optic installment within a new theme park. The client paid WhiteRiver $100,000 on December 29 for the services, which had been completed. Justin spent $400 for a round-trip airline ticket and put the charge on his corporate credit card. Justin will not receive the credit card bill until mid-January, several weeks after the close of the accounting period. When should the airfare expense be accounted for? In 2000 or in the following year? Why? Solution 1

6. Sample PreMBA Assessments (con’t) 1. Justin Thompson manages the New York subsidiary of WhiteRiver Telecom. On December 27, 2000, Justin traveled to San Francisco, Calif., to oversee the fiber optic installment within a new theme park. The client paid WhiteRiver $100,000 on December 29 for the services, which had been completed. Justin spent $400 for a round-trip airline ticket and put the charge on his corporate credit card. Justin will not receive the credit card bill until mid-January, several weeks after the close of the accounting period. When should the airfare expense be accounted for? In 2000 or in the following year? Why? Solution 1 Solution 1 The airplane ticket expense should be recorded in the accounting period 2000. It does not matter that WhiteRiver will pay for the ticket in 2001. The company must be consistent with the matching principle. All expenses and costs should be recognized in the same period as the revenue to which it relates. Since the revenue was earned in 2000, the expense must be recognized in 2000.

7. Sample PreMBA Assessments (con’t) 2. Omni-Chip has a long-standing business relationship with WhiteRiver Telecom. At the end of the first quarter, WhiteRiver agreed to purchase $60,000 worth of computer chips from Omni-Chip. Because of their long, positive relationship, WhiteRiver paid Omni-Chip in advance—one week before the end of the quarter. The computer chips were not shipped to WhiteRiver until two weeks later. When should Omni-Chip record the $60,000 sale as actual revenue? Solution 2

8. Sample PreMBA Assessments (con’t) 2. Omni-Chip has a long-standing business relationship with WhiteRiver Telecom. At the end of the first quarter, WhiteRiver agreed to purchase $60,000 worth of computer chips from Omni-Chip. Because of their long, positive relationship, WhiteRiver paid Omni-Chip in advance—one week before the end of the quarter. The computer chips were not shipped to WhiteRiver until two weeks later. When should Omni-Chip record the $60,000 sale as actual revenue? Solution 2 Solution 2 Omni-Chip should not record the WhiteRiver transaction as revenue until it is actually earned. Just because WhiteRiver paid in advance does not mean the revenue has been earned. Omni-Chip cannot recognize the revenue until the computer chips are shipped.

9. Exploring a Mastery Course • Go to http://www.cardean.edu • On the left margin navigation, enter a user name (which would be aaa1, aaa2, aaa3, or aaa4) and password (welcome) • Click the Login box underneath the user name and password • Click Experience Center in the left margin navigation • Click Technical Setup either on the left margin navigation or in the body of the page to ensure you have the proper technical setup • After completing the technical setup, click Go To Courses on the left margin navigation • Under the heading Explore Other Cardean courses you will see Assessing the Profitability of Operations listed. Click Go To Course to enter the course. • The user names and password are valid for your exploration until 8.17.01

10. What does the future hold? • Interactive learning objects • Career-based learning paths • Other developments

11. Your Turn: What have we missed?

12. Thank you for your participation • Steve Orpurt orpurt@unext.com 847.405.5037 • Doug Stein stein@unext.com 847.940.2529 UNext Inc. 500 Lake Cook Road Suite 150 Deerfield Illinois 60015.5609