Financial Accounting and Reporting

Financial statements of a company consists of the following:

• An income
• A balance sheet
• A retained earnings statement
• A statement of cash flows.

Other information includes:

• Information included in the notes to the financial statements
• The management discussion and analysis

Please do a preliminary research and discuss the following questions.

1. Discuss the purpose of the each of the above statements/information.

2. Select 2 companies in the same industry, and use the Internet to find their current financial statements. In the financial statements, find the balance sheet. Prepare a report in which you will compare the 2 balance sheets from the companies including the following analysis:

o Read the footnotes to the financial statements to see what they disclose about their assets, liabilities, and stockholders' equity. Are they using the same names for accounts, such as investments or other intangible assets?

o What account names do they have that are distinctive to the business?

o What can you find about their long-term debt?

- What type of debt do they have outstanding, and what are the terms of the agreement?
- Was the debt issued at a premium or a discount?

What other types of information are disclosed in their long-term debt?

Based on your study of the two companies balance sheet and in your opinion, which company has better financial position. Please discuss your reasons. Share with the class what you have found. Do not use companies that one of your classmates has used.