ACC501 MOD1 CASE1-Introduction, Review of Accounting Process and Financial Statements

ACC501 MOD1 CASE1-Introduction, Review of Accounting Process and Financial Statements

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Running head: INTRODUCTION, REVIEW OF ACCOUNTING PROCESS 1 Introduction, Review of Accounting Process and Financial Statements ___________________________ TUI University 3/26/12
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INTRODUCTION, REVIEW OF ACCOUNTING PROCESS 2 Introduction, Review of Accounting Process and Financial Statements Introduction This paper is a two-part discussion and review of financial statements dissected as follows: 1) Basic accounting principles, terminology, and their importance to financial statements. 2) An analysis of financial statements from several publicly held corporations 3) Fundamental organization of a balance sheet, income statement, and statement of cash flows in financials. 4) A determination of whether the net income or cash from operating activities is more useful based on the assessment for each company. 5) Future trend prediction for each company and various methods to obtain relevant information of individual segments for each entity. Essentially, financial statements or a Form 10-K is a comprehensive and annual financial breakdown of an organization’s accounting trends relative to business operations, resources and objectives, and a snapshot of historical costs, expenses, receivables, payables, and the like (U.S. Securities and Exchange Commission Form 10- K, 2009, para 2). Financial statements are summarized records of an entity’s financial activities and provide both a short- and long-term overview and analysis of a business’s financial viability and stability. Additionally, financial statements a/k/a Form 10-Ks are required from all businesses exceeding assets of $10 million by the U.S. Securities and Exchange Commission (SEC) (U.S. Securities and Exchange Commission Form 10-K, 2009).
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INTRODUCTION, REVIEW OF ACCOUNTING PROCESS 3 Although financial statements often contain various types of monetary data, three basic components should always exist in a company’s financial summary inclusive of the balance sheet, income statement, and the cash flow statement. Various industries and individuals use financial statements to include government entities, publicly traded companies, and investors. Part I Therefore, understanding certain accounting principles is imperative to businesses, investors, and accountants. Such knowledge is necessary for businesses relative to regulatory compliance as mandated by the SEC, accurate income reporting, and assists entities in determining their financial viability, current and future expenditures, assets, and monetary risk (U.S. Securities and Exchange Commission, 2011). Some terms along with their definitions follow: 1) As defined by Investopedia , “Generally Accepted Accounting Principles (GAAP) is a widely accepted set of rules, conventions, standards, and procedures for reporting financial information, as established by the Financial Accounting Standards
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ACC501 MOD1 CASE1-Introduction, Review of Accounting Process and Financial Statements

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