IntroductionThe present project analyses the accounting function of Micron, a Delaware corporation that was incorporated in 1978. The company’s Form 10-K report for the 2013-14 fiscal year is analyzed in the project. The report is based on the company’s audited annual report, which is a summary of its financial information, products, and growth plans for the owners and potential investors (Chapter 14 Lecture, 2016). It is worth noting that the annual report is GAAP compliant. PricewaterhouseCoopers LLP, San Jose, California office, audited the company’s financial statements (Micron Technology, Inc., 2014). The different elements of the company’s accounting function that are analyzed in the present essay include its ability to meet the various functions of accounting and the adherence to accounting standards.
Ability to Meet the Functions of Accounting
Accounting has four primary functions, which are to record, measure, and interpret financial data, produce goods and services, report only to those within the organization, and report only to those outside the organization. Enron’s financial statement record, measure, and interpret financial data. Each of its three primary financial statements, which are the income statement, balance sheet, and statement of cash flows, all provide their users with relevant information.
The income statement, which is a financial statement that shows a company’s profitability over a period, records the company’s revenues, expenses, and profits over a fiscal year. Revenue refers to the total amount of money received from the sale of goods, services, and any related to the sale of the products. Its balance sheet measures and records its assets, equity, and liabilities at a point in time, normally the year-end. It is based on the basic accounting equation, which equates a company’s assets to the sum of its equity and liabilities (Chapter 14 Lecture, 2016).
The cash flow statement explains how the company’s cash changes from the beginning to the end of the fiscal year (Chapter 14 Lecture, 2016). It has three categories, which are the cash from operating activities such as revenue, expenses, current assets, and current liability accounts, cash from investing activities, and cash from financing activities.
The company’s accounting function provides notes to the financial statements, which is a way of providing the users of the financial statements with the interpretation of the financial statement. The notes explain most of the line items in the financial statement. They also provide some other accounting disclosures such as the company’s use of estimates, the basis of presentation of financial statements, product warranty, and investment in research and development.
Adherence to Standards
The company’s financial statements are prepared per US GAAPs. Different elements of the statements are evidence of the use of US GAAPs. For example, its financial statements are accrual based (Chapter 14 Lecture, 2016). The company recognizes revenue when evidence that a sales arrangement exists, when delivery has occurred, or when the price for products is fixed or determinable and its collectability is reasonably assured (Micron Technology, Inc., 2014).
The company’s accounting function also adheres to Sarbanes-Oxley Act of 2002. For example, it meets the provisions of Section 409 of the Act, which issuers of financial statements to disclose information on any material changes in their financial condition or operations. For instance, the company reports its acquisition of Micron Memory Japan, Inc. in its annual report (Micron Technology, Inc., 2014). The function also adheres to Section 302 of the Act that requires a company’s top officials to review the report for any material untrue statements or omissions that may be considered misleading and append their signatures on the financial statements after the review (Sarbanes-Oxley, 2016). The Chief Executive Officer, the Vice President of Finance, the Chairman of the Board of Directors, and the Directors all signed the company’s financial statement.
The present essay has successfully analyzed the accounting function of Enron. It has analyzed the function’s adherence to accounting standards and its ability to meet the core functions of accounting. It has found out that the role successfully measures, records, and interprets the company’s financial data. It has also discovered that the role is based on US GAAPs and that it adheres to Sarbanes-Oxley Act.
- Chapter 14 Lecture. (2016). Boise State Universtity.
- Micron Technology, Inc.,. (2014). Form 10-K Report (1st ed.).
SARBANES-OXLEY,. (2016). Sarbanes-Oxley Act Summary and Introduction. Soxlaw.com. Retrieved from http://www.soxlaw.com/introduction.htm