ACC201 Financial Accounting
Part I. Search the course background information, the Internet and/or the Cyber Library. Discuss each of the following terms. Your discussion should expand on the definition as given in the course terms. Explain why this concept is important to financial statements.
A. Generally Accepted Accounting Principles. As per Investopedia, GAAP refers to "common set of accounting principles, standards and procedures that companies use to compile their financial statements. GAAP are a combination of authoritative standards (set by policy boards) and simply the commonly accepted ways of recording and reporting accounting ...view middle of the document...
Locate the following on each of the statements:
The Balance Sheet
The Income Statement
The Statement of Cash Flows (you may have to search the company site to find this information if it is not in the annual reports). All the statements are attached in the excel file on the reference page.
Which is more useful in your opinion for each of the two companies: Net Income or Cash from Operating Activities? Cash from operating activities is more useful to understand the solvency of the organization. It indicates the cash generated or used by the organization from the operations. It takes care of all the operational cash transactions of the business whereas net income includes accrued transactions also.
Make two predictions about each company from that company's financial statements.
Predictions for Unilever
1) Sales will grow by 5% as the past year growth is around 11% (See excel file).
2) Net Income will grow by 5% as the past year growth is around 10% (See excel file).
I have taken less growth due to recession
Predictions for Kraft
1) Assets will grow by 10% as the past year growth is around 22% and I have taken less growth due to recession. (See excel file).
2) Long term debt will grow by 20% as the past year growth is around 82% and I have taken less growth due to recession. (See excel file).