Case II: McDonald’s Financial Statements
From the balance sheet, the most two items that likely represent unexpired costs are property and equipment. The most two items likely represent accruals of unrecorded expenses are Account payable and accrued payroll.
According to the statement of income, we can see that the total revenue for year 2008 is more than year 2007 by $735.8 (in millions). The operation costs and expenses for year 2008 is less than year 2007 by $1828.1 (in millions) and the common share of year 2008 is also more than year 2007. The net income for year 2007 is $2,395.1(in millions) and the income for year 2008 is $4,313.2(in millions). Therefore we can see that McDonald has grown in the past year.
From the statement of income, we can see that McDonald’s revenue keeps growing from year 2006 to year 2008. The revenue grows from year 2006 $20895.1(in millions) to $22786.6 (in millions) and year 2007 reach to $23,522.1(in millions). From year 2007 to year 2008, it grew 3.23%. The income also increase from $2395.1(in millions) to $4313.2(in millions), which increased 80%. According to the consolidated operating results we know that the revenue for McDonalds grown every year and the operating cost and expenses decrease, therefore the sales and income changes bode well for McDonalds’ future.
We can see that McDonalds’ financial statements were prepared using GAAP by the “REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM”. It said “…the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2008, in conformity with U.S. generally accepted accounting principles.”
For sole proprietorship or partnership there won’t be any Equity or common stock. From the statement of shareholders’ equity, it list equity and common stock issued, so McDonalds is a corporation.