Description
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 Costco’s 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.

Explanation & Answer

View attached explanation and answer. Let me know if you have any questions.
Page |1
Research Memo on Costco’s Financial Statements
The outline
Company’s Overview:
Costco Wholesale Corporation is a publicly trading multinational company based in
Washington, United States.
Classification of Accounts in Balance Sheet & Income Statement:
The balance sheet for Costco is a consolidated balance sheet that includes the financial
position of the parent and all the subsidiaries as of September 2, 2018.
Process of Movement of Net Income from Income Statement to Balance Sheet:
The process of movement of net income described above, from the income statement to
the balance sheet, is like any other company. The net income of $3,134 has been added to the
retained earnings account, and the closing balance of retained earnings contains that net income.
Components of Balance Sheet & Income Statement in Services, Manufacturing, and
Merchandise Industries:
The basic outline of the balance sheet and income statement for all three industries is the
same. The difference is mainly in the sub classification of main components.
Relative Evaluation of Costco’s Balance Sheet and Income Statement:
The industry of Costco, as defined at Yahoo Finance, is “Discount Stores,” and the
business sector is defined as “Consumer Defensive.” Costco falls into the third category of
merchandising industry.
Page |2
Elaboration of Costco’s Revenue:
The revenue for Costco is for selling merchandising inventories through its retail outlets
or store and the income from its membership warehouses.
General Effect of Revenue and Operations on Various Inventories:
In general, the nature of revenue and company operations does affect the size and
composition of inventories in a company.
Analysis of Financial Position of Costco for 2018:
The 2018 balance sheet and income statement of Costco illustrates its financial position
and performance for the year.
References
Research Memo on Costco’s Financial Statements
Research Memo on Costco’s Financial Statements
Name
Course
Instructor's Name
Date
1
Research Memo on Costco’s Financial Statements
2
Research Memo on Costco’s Financial Statements
Company’s Overview:
Costco Wholesale Corporation is a publicly trading multinational company based in
Washington, United States. The company began its operations in 1983. The company’s key
business activity is retailing of merchandising inventories through its retail outlets or
membership warehouses in multiple countries. Up to 2018, the company has768 warehouses
with 533 in the United States, 100 in Canada and 39 in Mexico, and 28 in the United Kingdom.
Below, in different sections of this memo, I would demonstrate my understanding of the
company, acquired through research on its financial statements for the year 2018.
Classification of Accounts in Balance Sheet & Income Statement:
The balance sheet for Costco...
