Accounting Process and Financial Statements of Dole Food Company - Essay Example

In the fiscal year ended 2, 2010, this company generated operating income of about $352 million and total revenue of approximately $6.8 billion.

By January 2, 2010, Dole had total revenue of $4.1 billion. Dole has divided its business operations into three segments: the fresh vegetable segment produces and distributes fresh-packed and value-added salads, and vegetables to institutional customers and retailers primarily in Europe, North America, and Asia (Dole Food Company, Castle & Cooke, Inc, 2003). The fresh fruit segment is divided into several departments, which are responsible for the production and distribution of fresh fruits to retail, wholesale, and institutional customers worldwide. The third segment is packaged foods segment, which also includes several divisions that process and distribute packed foods including frozen fruit, juices, fruit, and healthy snack food (U.S. International Trade Commission, 2002). The writer chose to analyze the accounting process and financial statements of Dole Food Company because of its outstanding performance in the food processing industry. In addition, it was not difficult obtaining the company’s financial statement since my mother works in the company as a quality assurance manager. The financial statements used for this project were obtained from the internet, by opening the company’s Website link I was given by my mother. The main aim of this paper is to understand the analysis of the accounting process and financial statements of Companies by focusing on Dole Food Company. In the paper, I will analyze Dole’s balance sheet, statements of cash flow, and income statements.

Before analyzing Dole’s accounting process and financial statements, it is necessary to understand some of the key accounting concepts and terms that are used by Dole’s accountants when recording and balancing financial statements and other transactions.

• Generally Accepted Accounting Principles (GAAP) - this principle refers to the standard framework of guidelines for financial accounting (Bernstein & Wild, 2000). It includes conventions, standards, and principles that accountants observe when recording and balancing financial statements and other transactions. GAAP can be obtained from several sources including the promulgation of the Accounting Principles Board and Financial Accounting Standards (Pefianco & Rosario, 2006).
• Accrual Basis versus Cash Basis Accounting: accrual basis is the income earned and reported in particular periods despite of when it was received (Costales & Szurovy, 1993). It also includes the expenses that were incurred regardless of whether they were paid or not. In the financial statements used for this project, it is evident that Dole’s accountants recorded both expenses and income when they occurred. Cash basis accounting involves the recording of transactions based on cash position and cash flow. Revenue is recorded upon cash receipt, and expenses when cash is paid. This accounting method is evident in Dole’s financial statements; however, it is not commonly used like Accrual Basis Accounting (Hey-Cunningham, 2007).
• Current Assets and Liabilities versus Non-Current Items: Current assets are items that are available in cash form, or can be changed into cash within a short period (Dyckman, 2001). An example that is present in Dole’s financial statement is inventory or accounts receivable. Fixed assets, on the other hand, are assets that cannot easily be converted into cash within a short period; therefore, they are assets that can only change over a long period. Examples that are evident in Dole’s balance sheet are land, vehicle, equipment, and building (Dyckman, 2001). Current liabilities are liabilities coming due in a short while, usually within a financial year. Examples in the case study are sales taxes, employment, accounts payable, salaries payable, and income taxes.
• Double Entry Accounting: double entry of transactions is mainly done to track how money is spent and where it goes. In Dole’s balance sheet, some entries appear both on the assets and liabilities sides of the book (Gill & Chatton, 1999).
• Historical cost: this refers to the original value of an asset at the time it was purchased as opposed to the market value (Gill & Chatton, 1999). It also includes other expenses, which are occurred to acquire an asset. In the balance sheet, they include furniture, machines, building, and land (Dyckman, 2001).

In summary, Dole’s balance sheet is consolidated. It lists the company’s assets, stockholder equity, and liabilities. From the balance sheet, it is evident that the company incurred losses in assets. The statement of Cash Flow is also consolidated. It is highly detailed, and it covers changes in operating assets and liabilities, cash flows from financing activities, cash paid during the financial year, operating activities, effects of change rate changes on cash, and cash flows from investing activities. This statement, therefore, is one of the most fundamental statements to this company. The income Statement (Consolidated) is particularly direct, and it points out the earnings and losses from 2010 to 2011.