Introduction, Review of Accounting Process and Financial Statements

2050 WordsMay 24, 20119 Pages
Introduction, Review of Accounting Process and Financial Statements Abstract This paper explains different types of accounting phrases and how they directly affect the accounting field. Phrases which are included and defined in the paper are Generally Accepted Accounting Principles, Contra-Asset Accounts, Historical Cost, Accrual Basis vs. Cash Basis Accounting, and Accounting Standards Codification. Definitions and examples of these terms are included as well as explanations of how they are important to financial statements. The financial statements of Samsung, Lockheed Martin and RTL Group will also be examined. Their financial data will be dissected in order to understand their success and highlight their operating activities.…show more content…
Accrual basis and cash basis accounting are important for financial statements because they are necessary methods of recording and documenting all income and expenses over a certain period of time. If this information was not recorded, companies would not have accurate financial information and would not be successful. Accounting Standards Codification is a major restructuring of accounting and reporting standards designed to simplify user access to all authoritative U.S. generally accepted accounting principles (GAAP) by providing the authoritative literature in a topically organized structure (www.aicpa.com). This compilation of important information allows easier access to basic guidelines and principles of accounting standards. Samsung is a company specializing in a large array of up to date technological electronics. Upon reviewing their financial statements in their 2009 Annual Report, it is evident that the organization of the balance sheet focuses on the assets, liabilities and the shareholder’s equity. The organization of the income statement highlights sales, operating profit and net income. The organization of the statement of cash flows includes operating activities, investing activities and financial activities. The balance sheet statement is more useful for Samsung because it combines all of the important factors
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