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Essay / Research Paper Abstract
A 6 page paper defining several accounting terms and assessing the income statements, balance sheets and cash flow statements of GM, Home Depot and Billabong. Bibliography lists 6 sources.
Page Count:
6 pages (~225 words per page)
File: CC6_KSacctFinStmtGM.rtf
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Unformatted sample text from the term paper:
Principles The code that governs financial reporting collectively is known as Generally Accepted Accounting Principles (GAAP), established by the Financial Accounting Standards Board
(FASB) for the purpose of ensuring uniformity in financial accounting. Historical Cost The historical cost principle holds that the reported value of an
asset is the actual cost of the asset. If a company is able to acquire an abandoned factory at a fraction of its value, then it can report as
an asset only the cost of the factory, rather than what the market value might be. Because the integrity of the accounting equation of assets + liabilities = equity
needs to be maintained, the value of assets is reported in terms of their historical cost rather than market value or estimated value, which may be greatly inflated and so
skew the accounting equation (Day, n.d.). Accrual Basis vs. Cash Basis Accounting In the cash basis of accounting, neither revenues nor expenses are
recognized until the cash associated with them is received or paid (Financial Accounting, n.d.). In the accrual method - which publicly traded companies are required to use - "revenues
and expenses are recorded according to when they are earned and incurred" (Financial Accounting, n.d.), regardless of when the cash associated with them transfers. Thus orders placed in December
but not paid for until January are included in the earlier calendar year as revenues. Current Assets and Liabilities vs. Non-Current Items Non-current
assets and liabilities have long periods of time associated with them; current assets and liabilities are those that are used or will need attention in a period of less than
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