Financial Accounting
Module 1 Cases
Oktay Urcan
Q1-1: Where can you find information
regarding the following items?
Business: Company Overview (p. 4)
Management’s Discussion and Analysis of Financial
Condition and Results of Operations (pp. 15–16)
Financial Statements and Supplementary Data (pp.
39–88)
General Mills, Inc., 2023
Q1-2: Which are General Mills’ three
largest assets at the end of 2023?
1. Goodwill
2. Other intangible assets
3. Land, buildings, and equipment
(from the Consolidated Balance Sheets)
General Mills 2023 annual report
General Mills, Inc., 2023
Q1-3: Would you expect these to be
General Mills’ main assets given the
nature of its business?
It is not surprising that goodwill and other intangible assets are the largest
assets, given the nature of General Mills’ business (the other intangible assets
include brands, franchise agreements, and customer relationships (see Note 6:
Goodwill and Other Intangible Assets)). It is also not surprising that land,
buildings, and equipment is a large asset since General Mills is a
manufacturer.
General Mills 2023 annual report
From Note 6: Goodwill and Other Intangible Assets
General Mills, Inc., 2023
Q1-4: Which are the two largest
liabilities at the end of 2023?
1. Long-term debt
2. Accounts payable
(from p. 44 of the Consolidated
Balance Sheets)
General Mills 2023 annual report
General Mills, Inc., 2023
Q1-5: What types of obligations are
represented by these liabilities?
The long-term debt consists mainly of bonds (see
Note 9: Debt). Accounts payable most likely
consists of amounts due to suppliers, given the
nature of General Mills’ business.
General Mills 2023 annual report
From Note 9:
Debt (p. 63)
General Mills, Inc., 2023
Q1-6: What is the value of shareholders’
equity at the end of 2023?
Total shareholders’ equity (i.e.,
stockholders’ equity) is equal to:
$10,449.6 million
(from the Consolidated Balance Sheets)
General Mills 2023 annual report
General Mills, Inc., 2023
Q1-7: What is the value of
net sales for fiscal year
2023?
Net sales is equal to:
$20,094.2 million
(from the Consolidated Statements of Earnings)
General Mills 2023 annual report
General Mills, Inc., 2023
Q1-8: What was the net
income (or net earnings) for
Fiscal Year 2023?
Net earnings is equal to:
$2,609.6 million
(from the Consolidated Statements of
Earnings)
General Mills 2023 annual report
General Mills, Inc., 2023
Q1-9: What does the net income
number represent?
Net earnings measures the financial performance of General Mills over the
past fiscal year. For General Mills, net earnings is net sales plus any
divestitures gain, benefit plan non-service income, and after-tax earnings from
joint ventures less:
Cost of sales
SG&A expenses
Divestitures loss
Restructuring, impairment, and other exit costs
Net interest
Income taxes
General Mills 2023 annual report
Q1-10: Where can you learn
how the company accounts
for inventories?
In the Notes to Consolidated Financial
Statements, Note 2: Summary of
Significant Accounting Policies:
Inventories (p. 47)
General Mills 2023 annual report
Note 2: Summary of Significant
Accounting Policies
Inventories 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 are valued at net realizable value, and all related cash contracts
and derivatives are valued at fair value, with all net changes in value recorded
in earnings currently.
Inventories outside of the United States are generally valued at the lower of
cost, using the first-in, first-out (FIFO) method, or net realizable value.
Shipping costs associated with the distribution of finished product to our
customers are recorded as cost of sales and are recognized when the related
finished product is shipped to and accepted by the customer.
General Mills, Inc., 2023
Q1-11: What are the main
components of General
Mills’ inventories as of May
28, 2023? Please quantify.
Finished goods: $2,066.9 million
Raw materials and packaging: $572.2
million
Grain: $133.8 million
Note 18: Supplemental Information
(p. 84)
General Mills 2023 annual report
Note 18: Supplemental Information
The components of certain Consolidated Balance Sheet
accounts are as follows:
General Mills, Inc., 2023
Q2-1: Classify the following items as an
asset (A), a liability (L), or shareholders’
equity (E) for Dick’s Sporting Goods Inc.
_E_ a. Retained earnings _L_ f. Accounts payable
_A_ b. Income taxes receivable _E_ g. Additional paid-in capital
_L_ c. Other L-T debt and leasing oblig. _L_ h. Income taxes payable
_A_ d. Inventories, net _A_ i. Accounts receivable, net
_A_ e. Prepaid exp. _E_ j. Common stock
Dick’s Sporting Goods Inc. - Classifying assets, liabilities, and owners’ equity
Q3-1: How would you classify each of the
items below?
Current Fixed Long-Term Shareholders'
Current Liabilities
Assets Assets Liabilities Equity
(a) An agreement to hire one person to work as a
server
(b) A roasting machine used to roast coffee beans X
(c) Utilities for the current month payable next month X
(d) $4,000 in cash on hand X
(e) 1,000 shares of common stock X
(f) 50,000 kilograms of coffee beans X
(g) An invoice from the main supplier of coffee beans X
(h) A bank note, due in 3 years X
The IMHA Coffee Company - Classifying assets and liabilities
References
General Mills, Inc. (2023). 2023 annual report.
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