Interpret how the components of a balance sheet and income statement communicate the financial position of an organization.
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You are interested in a position managing the front-end operations of Costco, a publicly traded company. Whenever you interview for a new position, experts suggest you do research to make sure you understand all the components of the position, as well as the company. As part of the interview process you need to demonstrate competencies in both financial and managerial accounting. In order to prepare for your upcoming interview, you decide to demonstrate an understanding of the accounting components and uses of the balance sheet and income statement.
In a written memo to the Human Resources department of Costco, demonstrate you researched the company by addressing the following:
Explain the different classifications of accounts contained in the balance sheet and the income statement and the process for the income to move from the income statement to the balance sheet.
Identify the different components on the balance sheet and income statement within the service, merchandising, and manufacturing industries, and which industry Costco would fall within.
Evaluate the different accounts on the balance sheet and the income statement as these relate to Costco.
Elaborate on whether Costcos revenues are generated through providing a service, selling merchandise, or manufacturing operations or a combination of these processes.
Explain how the revenue and company operations in general affect various inventories on the balance sheet.
Analyze the financial position of Costco based on the 2018 financial statements.