Financial Statements:

Foundational Accounting Principles and Terminology

Shane R. Wagner

TUI University

Module 1 Case Study

29 August 2010

Abstract This paper will discuss the common fundamental accounting principles and analyze the financial statements of three major businesses. A basic understanding of the General Accepted Accounting Principles and the standards established within these practices, allow for investors to obtain an accurate snapshot of the financial health of a business. The different methods of documenting both current and future transactions, can have an impact on the information portrayed by the financial statements of an organization. In addition, the basic format of the financial statements can disclose additional considerations of the business, as will be discussed in the analysis of three major businesses within this paper. Information for the analysis portion was retrieved from the financial statements included in the assignment.

Keywords: Accrual Basis Accounting; Cost Basis Accounting; Current Assets and Liabilities; Double Entry Accounting; Financial Accounting Standards Board (FASB); General Accepted Accounting Principles (GAAP); Historic Cost; Non-current Items; Security Exchange Commission (SEC);

Financial Statements:

Foundational Accounting Principles and Terminology

Introduction

The basic of understanding of an organizations financial statement requires one to be familiar with fundamental accounting principles. The financial statement of any organization must follow standardized reporting rules, also known as Generally Accepted Accounting including double entry accounting, historical cost, accrual basis accounting, cash basis accounting, in addition to current and non-current revenue and liabilities. The common understanding of these principles will allow a manager to investigate the