The full disclosure principle states that any financial information that is significant enough to influence the judgment of an informed reader should be reported (Kieso, Warfield, Weygandt, 2007, p. 1282). If the financial information can not be reported in the financial reports such as the balance sheet, income statement, and the statement of cash flows, then it should be included in the notes to the financial statements or a supplementary information section. The notes to the financial statements are meant to be utilized as a way to explain, clarify, and expand upon the figures presented in the financial statements (Hagen, 2005, p. 1). By having all relevant financial information, management, customers, and investors can make more informed business decisions. This paper will discuss the notes to the financial statements for the Anheuser-Busch Companies, Incorporated regarding the sections of cash and cash equivalents, accounts receivables, and inventory.
The section of the notes to the financial statements titled “Cash and Cash Equivalents” is generally used to provide a definition to the reader as to what constitutes a cash equivalent (Hagen, 2005, p. 4). According to the notes in the financial statements for Anheuser-Busch Companies, Incorporated (2006, p. 48), “cash includes cash in banks, demanded deposits, and investments in short-term marketable securities with original maturities of 90 days or less.” Cash equivalents are normally the short-term but highly liquid investments that are considered to be both easily convertible to specified amounts of cash and so close to their maturity date that any risk related to changes in the interest rates are insignificant (Kieso, Warfield, Weygandt, 2007, p. 317). The explanation in the ...