Question

The ultimate goal of accounting is to provide both internal and external users with information that is relevant and reliable for their decision making purposes. US companies are subject to various reporting requirements, as mandated by the Securities Exchange Commission.

Go to the U.S. Securities & Exchange Commission site

Use Edgar to find the 12-31-2017 Annual Report (10K) for Southwest Airlines and respond to the following questions.

1.) What amounts did Southwest report for the following items for the year ended December 31, 2017?

Total Revenues

Operating Income

Net income or net loss

Total assets

Total current liabilities

Total equity

2.) What is Southwest’s basic earnings or loss per share for the year ended December 31, 2017?

3.) Looking in the notes to the statements, what do they mean when they talk about Non-GAAP Financial Measures? Explain.

Answer 1

Southwest Airline

Total Revenue	$21171 million
Operating Income	$3515 million
Net Income (Loss)	$3488 million
Total Assets	$25110 million
Total current Liabilities	$6905 million
Total Equity	$10480 million

2) Basic earning or Loss perr share for the year ended 31-Dec.2017 is 5.80..

3)

GAAP accounting measures are used to followed to show the correct accounting treatment and show the true value of the company. It helps investors and stakeholders to take some strategic decisions in the most appropriate way.

Non Gaap accounting measures prooves useful by investors when they feel that gaap accounting measures are not showing the true value of the company

In casw of southwest airlines since it is an airline company and we have limited GAAP which talks about specifically about the treatment of airline company hence it follows the non gaap accounting measures so that it can properly reflects the true value of the company.

Non-GAAP measures often separate and remove certain aspects of a company’s operations or remove the effects of large, unusual, or nonrecurring transactions. The calculation of these measures is highly subjective, and they are not necessarily comparable across companies or industries.

These gaap are as per the guidelines provided by SEC but may not subject to audit.

So the whole purpose of presenting the financial statements with non gaap accounting measures is to show the fair picture of accounts