November 7, 2011
Coca Cola Accounting Cycle
The Coca-Cola Company “branded beverage products available to consumers throughout the world through our network of Company-owned or controlled bottling and distribution operations, bottling partners, distributors, wholesalers and retailers — the world’s largest beverage distribution system” (The Coca-Cola Company, 2010, p. 91). Coca-Cola uses two methods of accounting the equity method and the cost method. The company’s financial statements are prepared according with accounting principles generally accepted in the United States. In addition the company has a hierarchy of management who is responsible for internal controls and preparing financial statements. The company consolidates accounting information into one set of financial statements. Consolidation
“Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes” (The Coca-Cola Company, 2010, p. 39 ). The company’s most critical accounting policies and estimates relate to basis of presentation, principles of consolidation, purchase accounting for acquisitions, recoverability of noncurrent assets, pension plan valuations, revenue recognition, income taxes, and contingencies. Management discusses “development, selection and disclosure of critical accounting policies and estimates with the Audit Committee of the Company’s Board of Directors” (The Coca-Cola Company, 2010, p. 39). The company recognizes revenue when evidence of arrangements exists, delivery of products, sales price charged, and collectability is assured. Cash discounts, funds for marketing, volume-based incentives are deducted from revenues. In some cases these deduction are paid in advance...