Paragraph 1 & 2:

Explore the web and download a copy of the 2007 annual reports for both Pepsico, Inc. and The Coca-Cola Company. Based on the information contained in these financial statements, determine each of the following for PepsiCo. At December 29, 2007 and for Coca-Cola at December 31, 2007:

• Total current assets
• Net amount of property, plant and equipment
• Total current liabilities
• Total non-current liabilities
• Accounts receivable, net
• Total stockholder's equity (Shareholder's equity)
• What conclusions concerning the companies respective financial position can be drawn?
• Based on your analysis of the above items, which company would you feel more confident investing in? Please explain your answer.

Paragraph 3 & 4:

As the controller of Rainbow Perfume Company, you discover a misstatement that overstated net income in the prior year's financial statements. The misleading financial statements appear in the company's annual report which was issued to the banks and other creditors less than a month ago. After much thought about the consequences of telling the president, John McNeally, about this misstatement, you gather your courage to inform him. John says, "What they don't know won't hurt them. But, just so we set the record straight, we'll adjust this year's financial statements for last year's misstatement. We can absorb that misstatement better in this year than in last year anyway. Just don't make such a mistake again." Discuss at least three of the following questions:

• Who are the stakeholders in this situation?
• What are the ethical issues in this situation?
• What would you do asthe controller in this situation?
• What types of controls could be included in the accounting cycle to prevent misstatements?