Accounting Policies and Revenue Recognition

Topics: Inventory, Generally Accepted Accounting Principles, Balance sheet Pages: 2 (453 words) Published: February 11, 2013
Accounting Policies are the specific policies and procedures used by a company to prepare its financial statements. These include any methods, measurement systems and procedures for presenting disclosures. Accounting policies differ from accounting principles in that the principles are the rules and the policies are a company's way of adhering to the rules. Revenue Recognition:

Revenue recognition determines the accounting period, in which revenues and expenses are recognized. General Mills recognize sales revenue when the shipment is accepted by their customer. Sales include shipping and handling charges billed to the customer. We generally do not allow a right of return. However, on a limited case-by case basis with prior approval, General Mills may allow customers to return product. Receivables from customers generally do not bear interest. Terms and collection patterns vary around the world and by channel. Cash and Cash Equivalents:

Cash and equivalents are cash or cash equivalents that a company possesses at any given time. Examples of cash equivalents are: money market accounts, treasury bills, and short term government bonds. Cash and cash equivalents are a business' most liquid assets. Cash on hand results from a positive cash flow statement. General Mills consider all investments purchased with an original maturity of three months or less to be cash equivalents. Merchandise Inventories

Merchandise inventory is the value of the products that a retailing or wholesaling company intends to resell for a profit. All inventories in the United States other than grain are valued at the lower of cost, using the last-in, first-out (LIFO) method, or market. Grain inventories and all related cash contracts and derivatives are valued at market with all net changes in value recorded in earnings currently. Inventories outside of the United States are valued at the lower of cost, using the first-in, first-out (FIFO) method, or market. Shipping costs associated with...
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