a. What is the nature of General Mills' business? That is, based on what you know about the company and on the accompanying financial statements, how does General Mills make money? General Mills, Inc. has three segments. U.S. Retail sells ready-to-eat cereals, meals, yogurt, organic foods, etc. The International segment includes retail business in Canada, Europe, Latin America and the Asia/Pacific region. Bakeries and Foodservice sells to retail and wholesale bakeries, and convenience stores. The company makes money through producing various food and products and distributing them all over the world.

b. What financial statements are commonly prepared for external reporting purposes? What titles does General Mills give these …show more content…

The firm gave their opinion on the date July 27.

giv. How is General Mills financed? What proportion of total financing comes from non-owners? General Mills financed its assets mainly with long-term debt. On its balance sheet, current portion of long-term debt and long-term debt make up a good proportion of total liabilities. 31.7% of total financing comes from non-owners.

hi. Review the revenue recognition policies of General Mills discussed in Note 1. Discuss how the recognition policies for recording net sales and the treatment of returns and promotions are consistent with the revenue recognition criteria under GAAP. General Mills recognizes sales revenue when shipments are accepted by their customers. Revenue recognition generally occurs when realized or realizable and when earned. In this particular case, revenue recognizes when realizable because transactions are completed and customers are the owner of sales items when they receive shipments. Thus, this is consistent with the revenue recognition criteria under GAAP. According to Note 1, "Sales are reported net of consumer coupon, trade promotion and other costs, including estimated returns". For each scenario, General Mills has specific policy as described in the note. Coupons and trade promotions expenses are based on related estimated item. The company generally doesn't allow for returns, which are recorded as reductions to selling prices. These practices are