Acc401 Ca1

TOURO UNIVERSITY INTERNATIONAL

Pete Smith

ACC403 - Principles of Accounting

Module 1 – Case

Introduction, Review of Accounting Process and Financial Statements

Part I.  Search the course background information, the Internet and/or the Cyber Library.  Discuss the terms listed below.  Your discussion should expand on the definition as given in the module background.  Explain why these concepts are important to financial statements.

Part II.  Refer to the latest annual financial statements or quarterly reports for the two following companies: Dole and Nestle. Generally, this information is found in the Investor Relations area of the website.

Coordinating Professor: Dr. Annette Hebble

July 16, 2010

Part I.  Search the course background information, the Internet and/or the Cyber Library.  Discuss each of the following terms.  Your discussion should expand on the definition as given in the course terms.  Explain why this concept is important to financial statements.

A.  Generally Accepted Accounting Principles. As per Investopedia, GAAP refers to "common set of accounting principles, standards and procedures that companies use to compile their financial statements. GAAP are a combination of authoritative standards (set by policy boards) and simply the commonly accepted ways of recording and reporting accounting information."

GAAP provides guidelines to prepare and present the financial statements. GAAP ensures consistency in the preparation of financial statements. It provides credibility to the financial accounting records. GAAP relates to all the aspects of recording, preparing and presenting the financial transactions.

B.  Liquidity. As per Investopedia, Liquidity refers to:

1. The degree to which an asset or security can be bought or sold in the market without affecting the asset's price. Liquidity is characterized by a high level of trading activity.

2. The ability to convert an asset to cash quickly. Also known as...