VSB 1002 Business Dynamics II
Accounting Assignment #2
Read Ch 17 pp 463-472.
Look at the Google Annual Report (link on my homepage) and answer the following questions:
1. What is the purpose of the Annual Report?
2. What is Google’s fiscal-year end? What period does their latest annual report cover? Why do you think there is
not more recent information available?
3. Read the Founders’ Letter at the beginning of the report. Who wrote it? What are the two main issues
addressed in the letter? What are the main points made about each issue?
4. What does the SEC call a company’s audited annual financial report? What are the unaudited quarterly reports
called?
5. Google offers products and services in the following categories: Search and Personalization, Applications, Client,
Google GEO, Android and Google Mobile, Google Checkout, and Google Labs. Briefly describe the products and/or
services offered in each area.
6. Explain Google AdWords and Google AdSense. What is the difference between the two?
7. How many Risk Factors does the company list in this report? In your own words, describe the 6 Risk Factors you
found to be most interesting.
8. Item 7 of the report is Management’s Discussion of Financial Conditions and Results of Operations. What are
some business trends identified and discussed in this section?
9. Which public accounting firm audited Google’s financial statements? What is an audit? What is the accounting
firm attesting to, according to the letters found on page 59 and 60 of the annual report?
10. Look at the Balance Sheet on page 61. For the latest fiscal year, report the following balances: Current Assets,
Noncurrent Assets, Total Assets, Current Liabilities, Long-term Liabilities, and Stockholders’ Equity. Use these
figures to write the Balance Sheet equation.
11. Look at the Income Statement on page 62. For the latest fiscal year, report Total Revenue, Total Costs and
Expenses, and Income from Operations, using an equation. How is Income from Operations different from Net
Income? What was Google’s average tax rate?
12. According to the Consolidated Statements of Cash Flows found on page 64 of the annual report, what are
Google’s three major activities? For the latest fiscal year, can you show in an equation how these 3 activities made
Google’s cash balance change from the beginning of the year to the end? (There will be a 4 th factor to take into
account – the effect of exchange rates, in order to explain the change in cash flow.)
13. What section starts on page 65 of the annual report? How long is this section and what does it contain? Do you
see why many people consider this section to be the most important part of an annual report?