Answers for Concept Questions:
a) General Mills is a leading producer of packaged consumer foods. According to the financial statements, General Mills makes most of the money from sales. They have 3 segments: US Retail, International and Bakeries and Food Services.
1) The following are the financial statements that are commonly prepared for external reporting purposes:
* Balance Sheet
* Income Statement
* Statement of cash flows
* Statement of Stockholder’s equity
2) General Mills gives the following titles for these financial statements: * Balance Sheet: Consolidated Balance Sheet
* Income Statement: Consolidated Statement of Earnings
* Statement of Cash Flows: Consolidated Statements of Cash Flows
3) Consolidated Definition: Consolidated Accounting includes 100% of the investee’s assets and liabilities on the investor’s balance sheet and 100% of the investee’s sales and expenses on its income statement. Specifically the consolidated balance sheet includes the gross assets and liabilities of the investee’s company, and the income statement includes the investee’s gross sales and expenses rather than just the investor’s share of the investee’s company’s net assets or income. All the intercompany sales and expenses are eliminated in the consolidation process to avoid double counting when, for example, goods are sold from the investee to the investor for resale to the parent’s ultimate customers.
c) U.S publicly traded firms must file financial accounting information with the Securities Exchange Commission. The two main compulsory filings are: * 10-K : The audited annual report that includes the four financial statements discussed above. * 10-Q : The unaudited quarterly report that includes summary versions of the four financial statements and limited additional disclosures. d)
* The Management is responsible for the financial statements. The financial statements are generally prepared by the Manager or the Chief Financial officer. * Here are the potential users of the General Mills financial Statements and the type of information they are interested in: 1) Managers: They use it to make operating, investing and financial decisions 2) Investors & Analysts: They use to help decide whether to buy or sell stock 3) Regulators: They use it to enact social and economic policies 4) Lenders and Rating agencies: Use it to help decide on a company’s credit worthiness and lending terms 5) Legal Institutions: Use it to assess fines and reparations in litigation 6) Others: Determining demands in labor union negotiations to levying damages for environmental abuses. 7) Customers and strategic partners: They use it to assess company’s ability to provide products or services as agreed and to assess the company’s staying power and reliability. 8) Shareholders and directors
9) Voters and their representatives
e) KPMG LLP, an independent registered public accounting firm is the external auditors for General Mills. * According to the first opinion, management’s assessment that General Mills maintained effective internal control over financial reporting as of May 28, 2006 is fairly stated, in all material respects, based on the criteria established in Internal Control – Integrated Framework issued by COSO. The consolidated balance sheets of General Mills, Inc. and subsidiaries as of May 28th 2006 and May 29 2005, and the related consolidated statements of earnings, stockholder’s equity and comprehensive income, and the cash flows for each of the fiscal years in the three – year period ended May 28, 2006 and the report dated July 27, 2006 expresses an unqualified opinion on those consolidated financial statements.
* According to the second opinion, the consolidated financial statements- the balance sheet, cash flow, income statement, stockholder’s equity is presented fairly, in all material respects, the financial...
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