Accounting Generally Accepted Accounting Principles Term Paper

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The balance sheet presents the three elements of financial position namely, assets, liabilities and equity. The balance sheet highlights the accounting equation which provides: Assets = Liabilities + Equity. In a balance sheet presentation, assets and liabilities are further classified into current and non-current to distinguish those used directly for operations as to those for long-term usage. An income statement is a formal statement prepared for a given period of time showing the performance of the enterprise. Performance is primarily measured in terms of the level of income earned by through the effective and efficient use of its resources. An income statement generally follows the equation: Net Sales/Revenue - Direct and Operating Expenses = Income. The Statement of Cash flow provide information about the historical changes in cash and cash equivalents which classifies cash flows during the period from operating, investing, and financing activities.

For the companies Ford Motor Company, Microsoft and ExxonMobil, the preparation of financial statements under the sound basis of accrual accounting would be more useful in the presentation of financial statements. The accrual basis renders a much reliable source of information about the financial position and performance as to the company's financial representations.
Such information may be used to a much accurate and meaningful decision making of its users.

Based on the recent financial reports of these three leading companies in their category, there is of no showing that they are going to consider any cessation of business. All are stable and able to cope up with the changing market environment. A continuing slump on Ford Motor Company's income from discontinuing operations signifies that the operating segment is nearly complete in its shut down process. Microsoft's margin on assets may b attributed to the decrease of cash and cash equivalents due to a dividend payout during the period. However, such result does not gravely affect the stability of the continuing operations. Exxonmobil company seems to be in good operating condition having increased resources to be attributed to an increase in sales during the latest period.


Meigs and Meigs, Accounting, the basis for Business Decisions. (McGraw-Hill International Book Company) 1982

Skousen, Stice and Stice, Intermediate Accounting….....

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