Question Details

Define par value, and discuss its significance 



1
Define par value, and discuss its significance in accounting.

2
Jeff Madden, the president and CEO of Earth Systems, Inc., a waste management firm, was
recently hospitalized, suffering from exhaustion and a heart ailment. Immediately prior to his
hospitalization, Earth Systems had experienced a sharp decline in its stock price, and trading
activity became almost nonexistent. The primary reason for this was concern expressed in the
media over a new untested waste management system implemented by the company. Mr.
Madden had been unwilling to submit the procedure to testing before implementation, but he
reluctantly agreed to limited tests after the system was operational. No problems have been
identified by the tests to date.
The other members of management called a meeting to determine what they should do. Rick
Farrell, the marketing manager, suggested that the company purchase a large number of shares
of treasury stock. In that way, investors might notice that activity had picked up, and might decide
to buy some more shares. This plan would use up most of the company's available cash, so that
there will be no money available for a cash dividend. Earth Systems has paid cash dividends
every quarter for over ten years.
Required:
1. Is Mr. Farrell's suggestion ethical? Explain.
2. Is it ethical to discontinue the cash dividend? Explain.


3  (Communication)
As part of a Careers in Accounting program sponsored by accounting organizations and
supported by your company, you will be taking a group of high school students through the
accounting department in your company. You will also provide them with various materials to
explain the work of an accountant. One of the materials you will provide is the Stockholders’
Equity section of a recent balance sheet.
Required:
Prepare a sentence or two explaining each major section: Common Stock, Additional Paid-in
Capital, and Retained Earnings. You should try to be brief but clear.




Business Management Assignment Help, Business Management Homework help, Business Management Study Help, Business Management Course Help