Horse Vet, LLC: Transaction Analysis and Statement of Cash Flows Preparation (Option 2)
This case pertains to the foundational underpinnings of the accounting process and the statement of cash flows. In Part I, students are not given a list of business events to record, but rather, they must ascertain what they were from a 2011 balance sheet, a 2012 balance sheet, and a 2012 income statement. Part II requires students to prepare a 2012 statement of cash flows using the same three financial statements as given for Part I. In Part III, students must rely on a 2011 balance sheet and a 2011 statement of cash flows to work backward to derive the 2010 year-end balance sheet. There are two versions of this case: The Option 2 case is a bit more challenging than the Option 1 case. Instructors should use Option 2 if they feel students are well grounded in their understanding of financial statement relationships and the customary financial reporting of a typical set of business events. Both cases reinforce students' learning related to the accounting process and the connectivity between the financial statements. Please note that only one version of the case should be used due to the existence of some overlap between the two.