FinancialProblem2-TeamA

# Financial reporting problem part two 3 not

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Financial Reporting Problem: Part Two 3 not consolidating their assets into expansive classifications would result in potentially overwhelming viewing for their somewhat casual audience. Cash Equivalents Cash equivalents are “short-term, highly liquid investments that are readily convertible to known amounts of cash, and so near their maturity that their market value is relatively insensitive to changes in interest rates” (Kimmel, Weygandt, Keiso, 2009, p. 349). In other words, cash equivalents are assets that can convert into cash easily; these assets are stocks and bonds, certificates of deposits, and other money market instruments (Investopedia, 2012). Cash and cash equivalents are reported on company’s balance sheet. Kellogg’s company balance sheet offers the public a clear view of its cash and cash equivalents for current and previous years. For a current year of 2011, company reported \$460 million in cash and cash equivalents. Kellogg’s highly liquid asset increased \$18 million from 2010. Company’s website providing financial reports offers the public definitions of each account, including Cash and Cash Equivalents. It also offers detailed notes on their cash equivalents and how much money is in stocks and bonds. Total Current Liabilities for 2011 – 2010 The sum of company’s accounts payable, long-term debts, and other current liabilities are Total Current Liabilities. Companies report total current liabilities on a balance sheet after the total assets and total current assets. Total liabilities and total current liabilities are different in the maturity time. A total liability includes mainly long-term debt. Total current liabilities are short- term liabilities, which also included long-term debt with a current maturity. For the current year of 2011, Kellogg’s company reports \$3,313 million in total current liabilities. In 2010 the company had only \$3,184 million in short-term debt. By analyzing the

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Financial Reporting Problem: Part Two 4 balance sheet and provided figures, it is clear that company’s total current liabilities increased because of a drastic rise in a notes payable account. From 2010 to 2011 notes payable account increased by \$190 million. Other accounts such as accounts payable and other current liabilities had a small increase comparing to notes payable.
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