At the conclusion of an accounting cycle, Walmart follows Generally Accepted Accounting Principles (GAAP) and employs the accounting cycle to generate financial statements and reports. This cycle comprises nine steps that encompass recording and processing accounting events. To initiate this procedure, Walmart gathers and evaluates data from its events and transactions. These transactions are then recorded in a general journal before being transferred to the general ledger.
The next step in the accounting cycle is to prepare an unadjusted trial balance. After completing the unadjusted trial balance, adjustments are made by the company, and an adjusted trial balance is then prepared. These adjustment entries are necessary to comply with revenue recognition and the matching principle, as well as accurately report assets, liabilities, and owner’s equity at the statement date. Additionally, they ensure proper reporting of revenues and expenses for the accounting period. This step is crucial in the accounting process as the data in the unadjusted trial balance may not be current and comprehensive.
This occurs because some events do not need to be recorded daily and because the company may have costs that expire over time but have not yet been recorded. At present, Walmart is prepared to arrange the accounts into financial statements and complete the accounting process. Following this, the company may choose to generate a post-closing trial balance to verify the accounts. The preparation of financial statements using the accounting cycle involves numerous steps and substantial effort, but this systematic set of guidelines assists in guaranteeing the accuracy and consistency of financial statements (Definition of ‘Accounting Cycle’, 2012).
The company has the discretion to determine which events to document in its financial statements, as there are no stringent guidelines. Nevertheless, it is advisable to incorporate measurable, relevant, and dependable elements. The company should strive to record all events that influence its financial standing for a more thorough comprehension. By furnishing more information within the financial statements, readers will have increased assurance when making financial decisions pertaining to the company.
Walmart’s financial report features unaudited Condensed Consolidated Statements of Income, showcasing financial information regarding the current and previous year’s operations. These statements encompass multiple revenue categories including net sales, membership and other income, total revenue, cost of sales, as well as operating, selling, general, and administrative expenses. Furthermore, these statements cover the operating income account along with the interest account.
The interest account includes debt, capital leases, and interest income that generate net interest. The following accounts show pre-tax income from operations and tax provisions. Then we have the income from continuing operations and the loss from discontinued operations after taxes. Finally, there is consolidated net income and consolidated net income attributable to noncontrolling interest, which represent Walmart’s overall net income.
Walmart offers income statements that display various financial metrics, such as income from continuing operations, basic and diluted net income per common share, weighted-average number of common shares, and dividends declared per common share. Additionally, Walmart’s financial report includes unaudited Condensed Consolidated Balance Sheets that present information on the company’s financial condition as of the statement date, as well as for the preceding six months and one year.
The balance sheets start with a list of different asset accounts including current assets, property and equipment, property under a capital lease, goodwill, and other assets and deferred charges. Following that are the liabilities and equity accounts. Current liabilities are listed first, then long-term debt, long-term obligations under capital leases, deferred income taxes and other liabilities, redeemable noncontrolling interest, and commitments and contingencies. Lastly, in the equity section of the balance sheets you will find common stock, capital in excess of par value retained earnings,and accumulated other comprehensive income.
The text presents the combined values of Walmart shareholders’ equity, encompassing noncontrolling interest. It also includes unaudited Condensed Consolidated Statements of Cash Flows for the current and previous year. These statements demonstrate cash inflows and outflows in operating, investing, and financing activities over a six-month period ending on the statement date. The financial statement begins with cash flows originating from operating activities.
The financial statement of Walmart provides information on cash flows from investing activities, financing activities, and the effect of exchange rates on cash and cash equivalents. To determine the total amount of cash and cash equivalent at the end of a period, the starting balance is augmented by the net increase in cash and cash equivalent. Although Walmart’s financial reports do not include a retained earnings statement, they do present calculations for returns on investments and assets.
At the start of its financial report, Walmart abides by SEC regulations through the inclusion of non-GAAP financial measures and disclosures on different matters.
References
According to Investopedia (2012), the ‘Accounting Cycle’ is the process that involves recording, summarizing, and reporting a company’s financial transactions. For more information on this topic, visit http://www.investopedia.com/terms/a/accounting-cycle.asp#axzz25KArwfPC.
The Walmart Corporate (2012) website offers access to the 8-K Current Report Filing. To view this filing, go to http://stock.walmart.com/financial-reporting/sec-filings.
