Introduction to Financial Statements

Financial Statements Reviewed

Introduction

The purpose of this paper is to identify the parts of financial statements as an introduction to accounting. In looking at the financial reports of General Mills, an American based international organization and Meiji Holdings Co., Ltd. a Japanese based international organization, we can learn about the parts of financial statements and associated purposes. Both of these organizations definitely have general similarities as global companies. General Mills mission is “Nourishing Lives-making lives healthier, easier and richer,” (www.generalmills.com). Meiji has a mission “to widen the world of ‘Tastiness and Enjoyment’ and meet all expectations regarding health and reassurance,” (www.meiji.co.jp). General Mills deals in different kinds of grocery food items and Meiji deals in foods and pharmaceuticals.

Organizational differences

Even though these organizations seem similar in their mission statements, the accounting standards used by both companies differed. General Mills uses Generally Accepted Accounting Practices, which is also known as, GAAP and Financial Accounting Standards Board (FASB) as referenced in their annual report. In regards to auditing, Public Company Accounting Oversight Board (PCAOB) is also referenced.

Accounting standards used by Meiji is Japan GAAP. This is widely compared to International Financial Reporting Standards, or IFRS (www.pwc.com/jp/ifrs). From Meiji’s financial reports, I wasn’t able to locate any reference or mention of any auditing oversight organization.

There was a marked, obvious difference from the annual reports and information available from each website. The General Mills site had very detailed and long financial reports as compared to Meiji. For example the GM Corporate Social Responsibility was an 8 page glossy, pdf report with many images while the Meiji CSR report was only 3 pages and was not as detailed. In terms of content and format, the GM site provided a 94 page 2014 annual report, a 49 page SEC form 10-Q report, an 8 page CSR report. These reports we less in volume from the Meiji site.

Types of Reports

        The 10-K report is a more comprehensive summary report submitted to the Securities and Exchange Commission, or SEC and is more detailed than the annual report with details like the organization’s history, structure, equity, holdings, earnings per share, etc. The annual report goes to the shareholders and describes operations and financial conditions while the Corporate Social Responsibility report (CSR) presents what corporations do for the environment, and social welfare, etc. It is often referred to as a report on the ‘corporate citizenship’ of the business (www.investopedia.com).

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