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    GAAP, Historical Cost, Basis of Accounting; Financial Statements

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    Part I. Discuss each of the following terms. Your discussion should expand on the definition as given in the course terms. Explain why this concept is important to financial statements.
    A. Generally Accepted Accounting Principles.
    B. Historical Cost.
    C. Accrual Basis vs. Cash Basis Accounting.
    D. Current Assets and Liabilities vs. Non-Current Items.

    Part II. Refer to the following three sets of annual reports which contain the financial statements. You may find the financial data independent of the annual report for Google. (Make sure you use the latest financial statements -- for the year 2010).
    Lockheed Martin

    Locate the following on each of the statements:
    The Balance Sheet
    The Income Statement
    The Statement of Cash Flows

    Describe the general organization of each of the three sets of financial statements. Which is more useful in your opinion for each of the three companies: Net Income or Cash from Operating Activities?

    Make one prediction about each company from that company's financial statements. Reach one additional conclusion about each company from the additional information you find in the annual report.

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    Attached is the answer for part 1 and part 2.

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    Solution Summary

    The solution discusses the GAAP, Historical Cost, Basis of Accounting; and Financial Statements.