Apple Inc.-like all other businesses-adjusts accounts prior to year-end to get correct amounts for the financial statements. Examine Apple Inc.'s Consolidated Balance Sheets in Appendix A and online in the filings section of www.sec.gov., and pay particu¬lar attention to "Accrued expenses."
Requirements
1. Why does a company have accrued expenses payable at year-end?
2. See Apple Inc.'s Consolidated Balance Sheets for 2013 and 2014. What was the balance of Accrued expenses at the end of each of those balance sheet years? What type of account is "Accrued expenses"?
3. See Note 3-Consolidated Financial Statement Details. Go to the section of that note for Accrued expenses. What expenses does Apple Inc. accrue according to this note? Verify that the total of the accrued expenses for each year is the same as the balance of Accrued expenses on the balance sheet for each of the two balance sheet years.
4. Compute net working capital, the current ratio, and the debt ratio for Apple Inc., at September 28, 2013, and September 27, 2014. Did the amount of net working capital and ratio values improve, deteriorate, or hold steady during fiscal 2014? Do Apple Inc.'s ratio values indicate relative financial strength or weakness?