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George Marunich: Honda Accounting Essay

Honda follows the standards given by the Financial Accounting Standards Board as well as the Securities Act 1934. Honda has maintained statements which are based on the assumptions of the management. Being a manufacturing firm depreciation has been a very important accounting practice. Companies operating in different countries would have to need different policies as well as rates of interest. The red flags found were the increasing gap in accounts receivables in relation to sales and unusual increase in inventories in relation to sales. Net sales decreased by 9.4%. Research and development has also been used as a mechanism to show capital expenditure of huge amounts of $5,733 million. Some of the other key bookkeeping practices include the practice of recording sales of units based on regions and recording net sales and other values of operating results in Yen and recording of results for the Honda group in a consolidated manner.

It interprets these copies into American currency. This was created for better understanding by its international stockholders. This was just as well as investors and the overseas exchange rates have an impact on its financial results. It also maintains split accounts of the group as well as its companies. People have tried to see that there have been hidden income statements or tried to demonstrate that all their debt and borrowings have been locked. The form created a special guarantee in safe tax havens. This would have been proved to be a trial to the entire community as the inventory committee and other monitoring forms have underscored on strict rules to show whatever loss or gain under correct subheadings so that in future confusions can be avoided. Some companies have recently have seen lot of confusion in their cases due to illegitimate bookkeeping values applied which led to the closure of the company.

With an proper economic management there will be ways to be able to shows the asset in any type association. So in order to have proper financial management, association, and reliability, many of the management will have to accepted the accounting Principles, corporate compliance, and the value of ethics. With these sorts of values are the financial accountings standards are used to normalize financial bookkeeping of municipal companies. These principles are vigorous for numerous reasons. They will be important to “those whose stock trades on the stock exchanges” (Raithel, 2005). These standards will allow the stockholders to be the financial state of the company. This will also allow the corporation to continue to be able to track if its cash flow.

The beginning of commercial acquiescence was all about following the written regulations of the company. With most companies they are trying to mandate a compliance and ethics program. With this you would offer ethical training to the employees of a company. The organization can be decided to apply an equity financing accounting principle in their businesses decisions which was fairly controversial as many believe that is not a wise way for a business to operate. Skeptics of debt financing believe that the risks are too high and the company could still be obliged to pay back loans regardless of whether the business endures. They may face high interest rates and they may be required to provide cash or warranty before using fairness. The decision that may extinguish the company’s credit rating. Therefore, this not an ideal option for new businesses.

Reference

http://world.honda.com/investors/annualreport/2010/pdf/honda2010ar-all-e.pdf


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