This paper will discuss the disclosures contained in Starbucks’ financial Statements that are related to cash and cash equivalents, receivables, and inventories. This paper will identify the components of their cash and cash equivalents. The original name of the company was Starbucks Coffee, Tea and Spices which later on was changed to Starbucks Coffee Company. Starbuck was staring in 1971; they were located at Seattle’s Pike Place Market. Starbucks is named after the first mate in Herman Melville’s Moby Dick. (Starbucks.com)
The full disclosure principle in accounting states that future events which could occur or may occur within a company, and will have a material economic impact on the financial situation of a business, should be disclosed to apparent and possible readers of the businesses statements. The FASB Concepts Statement No. 1 states the useful information is relevant when provided in financial statements and some are also better stated in other financial statements. On the other hand many critics argue that because of so much information and the detail of that information, many users of the financial statements have a difficult time taking in all the information. (Kieso, Weygandt, Warfield-Wiley, 2007).
While analyzing Starbucks Corporations Consolidated Statements of Earnings, Consolidated Balance Sheet, Cash Flows and Shareholder’s Equity, there were no notes following any of the sections. At the bottom of each page a statement stating, “See Notes to Consolidated Financial Statements”. (Starbucks, 2008). Starbucks’ fiscal year for this consolidated financial statement ended September 30, 2007.
Cash and Cash Equivalents
The components of cash and cash equivalents are stated by Starbucks as being highly liquid instruments with a maturity of three months or less when purchased to be cash equivalents. Cash usually consists of currency and money available on demand. And...