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PROCTER & GAMBLE

COST ACCOUNTING



Mission Statement



We will provide branded products and services of superior
quality and value that improve the lives of the world's consumers.
As a result, consumers will reward us with leadership sales,
profit, and value creation, allowing our people, our shareholders,
and the communities in which we live and work to prosper.




Procter & Gamble

Values
P&G is its people and the values by which we live.
We attract and recruit the finest people in the world. We build our organization from within, promoting and
rewarding people without regard to any difference unrelated to performance. We act on the conviction that the
men and women of Procter & Gamble will always be our most important asset.

Leadership
We are all leaders in our area of responsibility, with a deep commitment to deliver leadership results.
We have a clear vision of where we are going.
We focus our resources to achieve leadership objectives and strategies.
We develop the capability to deliver our strategies and eliminate organizational barriers.
Ownership
We accept personal accountability to meet our business needs, improve our systems, and help others improve their effectiveness.
We all act like owners, treating the Company's assets as our own and behaving with the Company's long-term success in mind.
Integrity
We always try to do the right thing.
We are honest and straightforward with each other.
We operate within the letter and spirit of the law.
We uphold the values and principles of P&G in every action and decision.
We are data-based and intellectually honest in advocating proposals, including recognizing risks.
Passion for Winning
We are determined to be the best at doing what matters most.
We have a healthy dissatisfaction with the status quo.
We have a compelling desire to improve and to win in the marketplace.
Trust
We respect our P&G colleagues, customers, and consumers, and treat them as we want to be treated.
We have confidence in each other's capabilities and intentions.
We believe that people work best when there is a foundation of trust.

Our principles

We Show Respect for All Individuals
We believe that all individuals can and want to contribute to
their fullest potential.
We value differences.
We inspire and enable people to achieve high expectations,
standards, and challenging goals.
We are honest with people about their performance.
The Interests of the Company and the Individual Are Inseparable
We believe that doing what is right for the business with
integrity will lead to mutual success for both the Company and
the individual. Our quest for mutual success ties us together.
We encourage stock ownership and ownership behavior.
We Are Strategically Focused in Our Work
We operate against clearly articulated and aligned objectives
and strategies.
We only do work and only ask for work that adds value to the
business.
We simplify, standardize, and streamline our current work
whenever possible.
Innovation Is the Cornerstone of Our Success
We place great value on big, new consumer innovations.
We challenge convention and reinvent the way we do business
to better win in the marketplace.
We Are Externally Focused
We develop superior understanding of consumers and their
needs.



We create and deliver products, packaging, and concepts that
build winning brand equities.
We develop close, mutually productive relationships with our
customers and our suppliers.
We are good corporate citizens.
We Value Personal Mastery
We believe it is the responsibility of all individuals to
continually develop themselves and others.
We encourage and expect outstanding technical mastery and
executional excellence.
We Seek to Be the Best
We strive to be the best in all areas of strategic importance to
the Company.
We benchmark our performance rigorously versus the very
best internally and externally.
We learn from both our successes and our failures.
Mutual Interdependency Is a Way of Life
We work together with confidence and trust across business
units, functions, categories, and geographies.
We take pride in results from reapplying others' ideas.
We build superior relationships with all the parties who
contribute to fulfilling our Corporate Purpose, including our
customers, suppliers, universities, and governments.


Chart of accounts
Asset Accounts
Current Assets

1000 Cash and Cash Equivalents
1010 Investment Money Market
1020 Investment- Certificates Deposits
1100 Accounts Receivable
1140 Other Receivables
1150 Allowance for doubtful accounts
1200 Raw Material Inventory
1205 Supplies Inventory
1210 Work In Progress Inventory
1215 Finish Goods Inventory Product # 1
1220 Finish Goods Inventory Product # 2
1230 Finish Goods Inventory Product # 3
1400 Prepaid Expenses
1410 Employee advances
1420 Note Receivable-Current
1430 Prepaid Interest
1470 Other Current Assets

Fixed Assets
1500 Furniture and Fixtures
1510 Equipment
1520 Vehicles
1530 Other Depreciable Property
1540 Leasehold Improvements
1550 Building
1560 Building Improvements
1690 Land
1700 Accumulated Depreciation, Furniture and
Fixtures
1710 Accumulated Depreciation, Equipment
1720 Accumulated Depreciation, Vehicles
1730 Accumulated Depreciation, Other
1740 Accumulated Depreciation, Leasehold
1750 Accumulated Depreciation, Building
1760 Accumulated Depreciation, Building
Improvement

Other Assets
1900 Deposits
1910 Organization Costs
1915 Accumulated Amortization, Organization Costs
1920 Notes Receivable, Non-Current
1990 Other Non-Current Assets

Liability Accounts
Current Liabilities
2000 Accounts Payable
2300 Accrued Expenses
2310 Sales Tax Payable
2320 Wages Payable
2330 401-K Deduction Payable
2335 Health Insurance Payable
2340 Federal Payroll Taxes Payable
2350 FUTA Tax Payable
2360 State Payroll Taxes Payable
2370 SUTA Payable
2380 Local Payroll Taxes Payable
2390 Income Taxes Payable
2400 Other Taxes Payable
2410 Employee Benefit Payable
2420 Current Portion of Long-term Debt
2440 Deposit from Customer
2480 Other Current Liabilities

Long-Term Liability
2700 Notes Payable
2702 Land Payable
2704 Equipment Payable
2706 Vehicles Payable
2708 Bank Loans Payable
2710 Differed Revenue
2740 Other Long-Term Liabilities

Equity Account
3010 Stated Capital
3020 Capital Surplus
3030 Retained Earnings

Revenue Accounts
4000 Product # 1 Sales
4020 Product # 2 Sales
4040 Product # 3 Sales
4060 Interest Income
4080 Other Income
4540 Finance Charge Income
4550 Shipping Charges Reimbursed
4800 Sales Returns and Allowances
4900 Sales Discounts

Cost of Goods Sold
5000 Product # 1 Cost
5010 Product # 2 Cost
5020 Product # 3 Cost
5050 Raw Material Purchases
5100 Direct Labor Costs
5150 Indirect Labor Cost
5200 Heat and Power
5300 Miscellaneous Factory Cost
5700 Cost of Goods Sold, Salaries and Wages
5730 Cost of Goods Sold, Contract Labor
5750 Cost of Goods Sold, Freight
5800 Cost of Goods Sold, Other
5850 Inventory Adjustments
5900 Purchase Return and Allowances
5950 Purchase Discount

Expenses
6000 Default Purchase Expense
6010 Advertising Expense
6050 Amortization Expense
6100 Auto Expense
6150 Bad Debt Expense
6200 Bank Fees
6250 Cash Over and Short
6300 Charitable Contributions Expense
6350 Commissions and Fees Expense
6400 Depreciation Expense
6450 Dues and Subscription Expense
6500 Employee Benefit Expenses, Health Insurance
6510 Employee Benefit Expenses, Pension Plans
6520 Employee Benefit Expenses, Profit Sharing Plan
6530 Employee Benefit Expenses, Other
6550 Freight Expenses
6600 Gift Expenses
6650 Income Tax Expense, Federal
6660 Income Tax Expense, State
6670 Income Tax Expense, Local
6700 Insurance Expense, Product Liability
6710 Insurance Expense, Vehicle
6750 Interest Expense
6850 Legal and Professional Expense
6900 Licenses Expense
6950 Loss on NSF Checks
7000 Maintenance Expense
7100 Office Expense
7200 Payroll Tax Expense
7250 Penalties and Fines Expense
7300 Other Taxes
7350 Postage Expenses
7400 Rent or Lease Expenses
7450 Repair and Maintenance Expense, Office
7460 Repair and Maintenance Expense, Vehicle
7550 Supplies Expense, Office
7600 Telephone Expenses
7620 Training Expense
7650 Travel Expense
7700 Salaries Expense, Officer
7750 Wages Expense
7800 Utilities Expense
8900 Other Expenses
9000 Gain/Loss on Sales of Assets

















Financial Statements
Consolidated Statement of Earnings
Amounts in millions except per share amounts; Years ended June 30 2011 2010 2009
NET SALES $82,559 $78,938 $76,694
Cost of products sold 40,768 37,919 38,690
Selling, general and administrative expense 25,973 24,998 22,630
OPERATING INCOME 15,818 16,021 15,374
Interest expense 831 946 1,358
Other non-operating income/(expense), net 202 (28) 397
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 15,189 15,047 14,413
Income taxes on continuing operations 3,392 4,101 3,733
NET EARNINGS FROM CONTINUING OPERATIONS 11,797 10,946 10,680
NET EARNINGS FROM DISCONTINUED OPERATIONS 1,790 2,756
NET EARNINGS $11,797 $12,736 $13,436
BASIC NET EARNINGS PER COMMON SHARE:
Earnings from continuing operations $ 4.12 $ 3.70 $ 3.55
Earnings from discontinued operations 0.62 0.94
BASIC NET EARNINGS PER COMMON SHARE 4.12 4.32 4.49
DILUTED NET EARNINGS PER COMMON SHARE:
Earnings from continuing operations 3.93 3.53 3.39
Earnings from discontinued operations 0.58 0.87
DILUTED NET EARNINGS PER COMMON SHARE 3.93 4.11 4.26
DIVIDENDS PER COMMON SHARE $ 1.97 $ 1.80 $ 1.64


Consolidated Balance Sheet
Amounts in millions; June 30

Assets 2011 2010
CURRENT ASSETS
Cash and cash equivalents $ 2,768 $ 2,879
Accounts receivable 6,275 5,335
INVENTORIES
Materials and supplies 2,153 1,692
Work in process 717 604
Finished goods 4,509 4,088
Total inventories 7,379 6,384
Deferred income taxes 1,140 990
Prepaid expenses and other current assets 4,408 3,194
TOTAL CURRENT ASSETS 21,970 18,782
PROPERTY, PLANT AND EQUIPMENT
Buildings 7,753 6,868
Machinery and equipment 32,820 29,294
Land 934 850
Total property, plant and equipment 41,507 37,012
Accumulated depreciation (20,214) (17,768)
NET PROPERTY, PLANT AND EQUIPMENT 21,293 19,244
GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill 57,562 54,012
Trademarks and other intangible assets, net 32,620 31,636
NET GOODWILL AND OTHER INTANGIBLE ASSETS 90,182 85,648
OTHER NONCURRENT ASSETS 4,909 4,498
TOTAL ASSETS $138,354 $128,172
Liabilities and Shareholders Equity 2011 2010
CURRENT LIABILITIES
Accounts payable $ 8,022 $ 7,251
Accrued and other liabilities 9,290 8,559
Debt due within one year 9,981 8,472
TOTAL CURRENT LIABILITIES 27,293 24,282
LONG-TERM DEBT 22,033 21,360
DEFERRED INCOME TAXES 11,070 10,902
OTHER NONCURRENT LIABILITIES 9,957 10,189
TOTAL LIABILITIES 70,353 66,733
SHAREHOLDERS EQUITY
Convertible Class A preferred stock, stated value $1 per share (600
shares authorized) 1,234 1,277
Non-Voting Class B preferred stock, stated value $1 per share (200
shares authorized)
Common stock, stated value $1 per share (10,000 shares authorized;
shares issued: 20114,007.9, 20104,007.6) 4,008 4,008
Additional paid-in capital 62,405 61,697
Reserve for ESOP debt retirement (1,357) (1,350)
Accumulated other comprehensive income (loss) (2,054) (7,822)
Treasury stock, at cost (shares held: 20111,242.2, 20101,164.1) (67,278) (61,309)
Retained earnings 70,682 64,614
Noncontrolling interest 361 324
TOTAL SHAREHOLDERS EQUITY 68,001 61,439
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY $138,354 $128,172




Consolidated Statement of Cash Flows
Amounts in millions; Years ended June 30 2011 2010 2009
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR $ 2,879 $ 4,781 $ 3,313
OPERATING ACTIVITIES
Net earnings 11,797 12,736 13,436
Depreciation and amortization 2,838 3,108 3,082
Share-based compensation expense 414 453 516
Deferred income taxes 128 36 596
Gain on sale of businesses (203) (2,670) (2,377)
Change in accounts receivable (426) (14) 415
Change in inventories (501) 86 721
Change in accounts payable, accrued and other liabilities 358 2,446 (742)
Change in other operating assets and liabilities (1,190) (305) (758)
Other 16 196 30
TOTAL OPERATING ACTIVITIES 13,231 16,072 14,919
INVESTING ACTIVITIES
Capital expenditures (3,306) (3,067) (3,238)
Proceeds from asset sales 225 3,068 1,087
Acquisitions, net of cash acquired (474) (425) (368)
Change in investments 73 (173) 166
TOTAL INVESTING ACTIVITIES (3,482) (597) (2,353)
FINANCING ACTIVITIES
Dividends to shareholders (5,767) (5,458) (5,044)
Change in short-term debt 151 (1,798) (2,420)
Additions to long-term debt 1,536 3,830 4,926
Reductions of long-term debt (206) (8,546) (2,587)
Treasury stock purchases (7,039) (6,004) (6,370)
Impact of stock options and other 1,302 721 681
TOTAL FINANCING ACTIVITIES (10,023) (17,255) (10,814)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS 163 (122) (284)
CHANGE IN CASH AND CASH EQUIVALENTS (111) (1,902) 1,468
CASH AND CASH EQUIVALENTS, END OF YEAR $ 2,768 $ 2,879 $ 4,781
SUPPLEMENTAL DISCLOSURE
Cash payments for:
Interest $ 806 $ 1,184 $ 1,226
Income taxes 2,992 4,175 3,248
Assets acquired through non-cash capital leases 13 20 8
Divestiture of coffee business in exchange for shares of P&G stock 2,466














Ratio Analysis / Trend Analysis
Ratio analysis can be done differently depending on what type of ratio you may want. Activity ratios measure how efficiently a company
performs day-to-day tasks, such us the collection of receivables and management of inventory. For example, exhibit 1 shows Procter and
Gamble co. Short-term (operating) activity ratio.

If we take a closer look at the inventory turnover which is calculated; revenue divided by inventory. We will see how during the 2010 to 2011
inventory turnover deteriorated but then during the year 2011 to 2012 inventory turnover increase by .55. This tells us that Procter & Gamble
inventory was being used at a much faster rate than the previous years. Now lets take a look at the whole picture, if we see in exhibit 1 from
2007 to 2012 the ratio turnover for inventory, receivables, working capital began with a very low ratio but each year it increase even though that
our economy has been a bit wobbly. But for payable turnover instead of increasing year by year it actually decrease. This is because Procter &
Gamble was having a harder time to pay of creditor during the 2007 to 2009 years when the economy was not so good. But during the last 3
years they were able to lower their payable rates ratio dramatically. This meaning that by combining all the information together we can come
to conclude that P&G turnover ratio has been improving gradually every year.
Procter & Gamble Co., short-term (operating) activity ratios
Jun 30, 2012 Jun 30, 2011 Jun 30, 2010 Jun 30, 2009 Jun 30, 2008 Jun 30, 2007
Turnover Ratios
Inventory turnover 12.45 11.19 12.36 11.49 9.92 11.22
Receivables turnover 13.79 13.16 14.80 13.54 12.35 11.54
Payables turnover 10.57 10.29 10.89 13.22 12.33 13.39
Working capital turnover 17.19 14.66 17.67 11.73 9.94 9.88
Average No. of Days
Average inventory processing period 29 33 30 32 37 33
Add: Average receivable collection period 26 28 25 27 30 32
Operating cycle 56 60 54 59 66 64
Less: Average payables payment period -35 -35 -34 -28 -30 -27
Cash conversion cycle 21 25 21 31 37 37
Source: Based on data from Procter & Gamble Co. Annual Reports
Stock Analysis on Net (www.stock-analysis-on.net)
Copyright 2012 EBIT Financial Analyses Center
Trends analyzes calculates the percentage change for one account over a period of two years or more. For example, for 2012 P&G net sales
were $83,680(amounts in million) and the 2011 net sales were $81,104(amounts in million). So we subtract $83,680-$81104 which equals to
$2576. We then divide $2576 by the previous year sales of $81,104, which equal to .0317626, after this we multiply by 100, which gives us 3.18
percent. What this percent means is that P&G increase in net sales 3.18 percent over the last year. But is this really good? Well in order to really
figure out if its actually an improvement we can compare it to the previous 2 years sales (2011-2010). So $81,104 minus $77,867 equals $3237,
we then divide by $77,867, which equal .04157 then multiply by 100. This tells us that even thought that sales went up by 3.18 percent in 2012-
2011 it increase very little compare to the increase in 2011-2010 of 4.1 percent. This would tell our stockholders and CEO that the company did
not do very well in net sales in the year 2012-2011 compare to 2011-2010.
But if we want to figure out the percentage trend analyzes for more than two years we would use another formula in order to calculate it. As we
can see in exhibit 1, 2008 year will be our base years and then we divide the amount in each non-base year by the amount in the base year and
multiply by 100. This will give us the trend percentage for each year.
(amounts in million)

Historical Data 2012 2011 2010 2009 2008
Net Sales $83,680.00 $81,104.00 $77,567.00 $75,295.00 $77,714.00
Operating Income $13,292.00 $15,495.00 $15,732.00 $15,188.00 $15,743.00
Trend Percentage
Net Sales 107.67687 104.36215 99.810845 96.887305 100
Operating Income 84.431176 98.424697 99.930128 96.474624 100





As we can see from the trend analyzes as the years for net sales go from 2008 to 2012, sales decrease from the years 2009-2010 but after this in
began to increase slowly each passing year. This could have happen because of bad economy or difficulty in the company. But if we take a look
into operating income then we could see that it actually went lower each passing years. But this time this is actually a very good thing, because
the company was actually able to cut cost by approximately 15 percent during the 4 years period. So as we see this process of trend analyzes
and percentage change can be done for any kind of item like cash, net income, inventory, liabilities, Cost of Goods Sold, etc. This will be a great
use for P&G since it will tell them if they are meeting their selling goals, or cutting enough money per year.
Information from Annual Report and Footnotes to
Financial Statements related to Cost Accounting
Consolidated Financial Statements
Use of Estimates
Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP)
requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and
accompanying disclosures. These estimates are based on managements best knowledge of current events and actions the Company may
undertake in the future. Estimates are used in accounting for, among other items, consumer and trade promotion accruals, pensions, post-
employment benefits, stock options, valuation of acquired intangible assets, useful lives for depreciation and amortization of long-lived assets,
future cash flows associated with impairment testing for goodwill, indefinite-lived intangible assets and other long-lived assets, deferred tax
assets, uncertain income tax positions and contingencies. Actual results may ultimately differ from estimates, although management does not
generally believe such differences would materially affect the financial statements in any individual year. However, in regard to ongoing
impairment testing of goodwill and indefinite-lived intangible assets, significant deterioration in future cash flow projections or other
assumptions used in valuation models, versus those anticipated at the time of the valuations, could result in impairment charges that may
materially affect the financial statements in a given year.
Revenue Recognition
Sales are recognized when revenue is realized or realizable and has been earned. Revenue transactions represent sales of inventory. The
revenue recorded is presented net of sales and other taxes we collect on behalf of governmental authorities. The revenue includes shipping and
handling costs, which generally are included in the list price to the customer. Our policy is to recognize revenue when title to the product,
ownership and risk of loss transfer to the customer, which can be on the date of shipment or the date of receipt by the customer.
A provision for payment discounts and product return allowances is recorded as a reduction of sales in the same period that the revenue is
recognized. Trade promotions, consisting primarily of customer pricing allowances, merchandising funds and consumer coupons, are offered
through various programs to customers and consumers. Sales are recorded net of trade promotion spending, which is recognized as incurred,
generally at the time of the sale. Most of these arrangements have terms of approximately one year. Accruals for expected payouts under these
programs are included as accrued marketing and promotion in the accrued and other liabilities line item in the Consolidated Balance Sheets.

Cost of Products Sold
Cost of products sold is primarily comprised of direct materials and supplies consumed in the manufacture of product, as well as manufacturing
labor, depreciation expense and direct overhead expense necessary to acquire and convert the purchased materials and supplies into finished
product. Cost of products sold also includes the cost to distribute products to customers, inbound freight costs, internal transfer costs,
warehousing costs and other shipping and handling activity.
Selling, General and Administrative Expense
Selling, general and administrative expense (SG&A) is primarily comprised of marketing expenses, selling expenses, research and development
costs, administrative and other indirect overhead costs, depreciation and amortization expense on non-manufacturing assets and other
miscellaneous operating items. Research and development costs are charged to expense as incurred and were $2,001 in 2011, $1,950 in 2010
and $1,864 in 2009. Advertising costs, charged to expense as incurred, include worldwide television, print, radio, internet and in-store
advertising expenses and were $9,315 in 2011, $8,576 in 2010 and $7,519 in 2009. Non-advertising related components of the Companys total
marketing spending include costs associated with consumer promotions, product sampling and sales aids, all of which are included in SG&A, as
well as coupons and customer trade funds, which are recorded as reductions to net sales.

Other Non-Operating Income/(Expense), Net
Other non-operating income/(expense), net, primarily includes net divestiture gains, interest and investment income and the provision for
income attributable to noncontrolling interests.
Currency Translation
Financial statements of operating subsidiaries outside the United States of America (U.S.) generally are measured using the local currency as the
functional currency. Adjustments to translate those statements into U.S. dollars are recorded in other comprehensive income (OCI). Currency
translation adjustments in accumulated OCI were a gain of $5,632 at June 30, 2011 and a loss of $861 at June 30, 2010. For subsidiaries
operating in highly inflationary economies, the U.S. dollar is the functional currency. Remeasurement adjustments for financial statements in
highly inflationary economies and other transactional exchange gains and losses are reflected in earnings.








Cash Flow Presentation
The Consolidated Statements of Cash Flows are prepared using the indirect method, which reconciles net earnings to cash flow from operating
activities. The reconciliation adjustments include the removal of timing differences between the occurrence of operating receipts and payments
and their recognition in net earnings. The adjustments also remove cash flows arising from investing and financing activities, which are
presented separately from operating activities. Cash flows from foreign currency transactions and operations are translated at an average
exchange rate for the period. Cash flows from hedging activities are included in the same category as the items being hedged. Cash flows from
derivative instruments designated as net investment hedges are classified as financing activities. Realized gains and losses from non-qualifying
derivative instruments used to hedge currency exposures resulting from intercompany financing transactions are also classified as financing
activities. Cash flows from other derivative instruments used to manage interest, commodity or other currency exposures are classified as
operating activities. Cash payments related to income taxes are classified as operating activities.

Cash Equivalents
Highly liquid investments with remaining stated maturities of three months or less when purchased are considered cash equivalents and
recorded at cost.

Investments
Investment securities consist of readily marketable debt and equity securities. Unrealized gains or losses are charged to earnings for investments
classified as trading. Unrealized gains or losses on securities classified as available-for-sale are generally recorded in shareholders equity. If an
available-for-sale security is other than temporarily impaired, the loss is charged to either earnings or shareholders equity depending on our
intent and ability to retain the security until we recover the full cost basis and the extent of the loss attributable to the creditworthiness of the
issuer. Investments in certain companies over which we exert significant influence, but do not control the financial and operating decisions, are
accounted for as equity method investments. Other investments that are not controlled, and over which we do not have the ability to exercise
significant influence, are accounted for under the cost method. Both equity and cost method investments are included as other noncurrent
assets in the Consolidated Balance Sheets.

Inventory Valuation
Inventories are valued at the lower of cost or market value. Product- related inventories are primarily maintained on the first-in, first-out
method. Minor amounts of product inventories, including certain cosmetics and commodities, are maintained on the last-in, first-out method.
The cost of spare part inventories is maintained using the average cost method.


Property, Plant and Equipment
Property, plant and equipment are recorded at cost reduced by accumulated depreciation. Depreciation expense is recognized over the assets
estimated useful lives using the straight-line method. Machinery and equipment includes office furniture and fixtures (15-year life), computer
equipment and capitalized software (3- to 5-year lives) and manufacturing equipment (3- to 20-year lives). Buildings are depreciated over an
estimated useful life of 40 years. Estimated useful lives are periodically reviewed and, when appropriate, changes are made prospectively. When
certain events or changes in operating conditions occur, asset lives may be adjusted and an impairment assessment may be performed on the
recoverability of the carrying amounts.

Goodwill and Other Intangible Assets
Goodwill and indefinite-lived brands are not amortized, but are evaluated for impairment annually or when indicators of a potential impairment
are present. Our impairment testing of goodwill is per- formed separately from our impairment testing of indefinite-lived intangibles. The annual
evaluation for impairment of goodwill and indefinite-lived intangibles is based on valuation models that incorporate assumptions and internal
projections of expected future cash flows and operating plans. We believe such assumptions are also comparable to those that would be used by
other marketplace participants.
We have acquired brands that have been determined to have indefinite lives due to the nature of our business. We evaluate a number of factors
to determine whether an indefinite life is appropriate, including the competitive environment, market share, brand history, product life cycles,
operating plans and the macroeconomic environment of the countries in which the brands are sold. When certain events or changes in
operating conditions occur, an impairment assessment is performed and indefinite-lived brands may be adjusted to a determinable life.
The cost of intangible assets with determinable useful lives is amortized to reflect the pattern of economic benefits consumed, either on a
straight-line or accelerated basis over the estimated periods benefited. Patents, technology and other intangibles with contractual terms are
generally amortized over their respective legal or contractual lives. Customer relationships, brands and other non-contractual intangible assets
with determinable lives are amortized over periods generally ranging from 5 to 30 years. When certain events or changes in operating conditions
occur, an impairment assessment is performed and lives of intangible assets with determinable lives may be adjusted.

Fair Values of Financial Instruments
Certain financial instruments are required to be recorded at fair value. Changes in assumptions or estimation methods could affect the fair value
estimates; however, we do not believe any such changes would have a material impact on our financial condition, results of operations or cash
flows. Other financial instruments, including cash equivalents, other investments and short-term debt, are recorded at cost, which approximates
fair value. The fair values of long-term debt and financial instruments are disclosed in Note 4 and Note 5, respectively.
New Accounting Pronouncements and Policies
Other than as described below, no new accounting pronouncement issued or effective during the fiscal year has had or is expected to have a
material impact on the Consolidated Financial Statements.

DISCLOSURES ABOUT DERIVATIVE INSTRUMENTS
AND HEDGING ACTIVITIES
On January 1, 2009, we adopted new accounting guidance on disclosures about derivative instruments and hedging activities. The new guidance
impacted disclosures only and requires additional qualitative and quantitative information on the use of derivatives and their impact on an
entitys financial position, results of operations and cash flows. Refer to Note 5 for additional information regarding our risk management
activities, including derivative instruments and hedging activities.

BUSINESS COMBINATIONS
On July 1, 2009, we adopted new accounting guidance on business combinations. The new guidance revised the method of accounting for a
number of aspects of business combinations including acquisition costs, contingencies (including contingent assets, contingent liabilities and
contingent purchase price) and post-acquisition exit activities of acquired businesses. The adoption of the new guidance did not have a material
effect on our financial position, results of operations or cash flows.
NONCONTROLLING INTERESTS IN CONSOLIDATED
FINANCIAL STATEMENTS
On July 1, 2009, we adopted new accounting guidance on noncontrolling interests in consolidated financial statements. The new accounting
guidance requires that a noncontrolling interest in the equity of a subsidiary be accounted for and reported as equity, provides revised guidance
on the treatment of net income and losses attributable to the noncontrolling interest and changes in ownership interests in a subsidiary and
requires additional disclosures that identify and distinguish between the interests of the controlling and noncontrolling owners. The Companys
retrospective adoption of the new guidance on July 1, 2009, did not have a material effect on our financial position, results of operations or cash
flows. Net expense for income attributable to the noncontrolling interests totaling $130 in 2011, $110 in 2010 and $86 in 2009 is not presented
separately in the Consolidated Statements of Earnings due to immateriality, but is reflected within other non-operating income/(expense), net.
After deduction of the net expense for income attributable to noncontrolling interests, net earnings represents net income attributable to the
Companys common shareholders.




RISK MANAGEMENT ACTIVITIES AND FAIR VALUE MEASUREMENTS
As a multinational company with diverse product offerings, we are exposed to market risks, such as changes in interest rates, currency exchange
rates and commodity prices. We evaluate exposures on a centralized basis to take advantage of natural exposure correlation and netting. To the
extent we choose to manage volatility associated with the net exposures, we enter into various financial transactions, which we account for
using the applicable accounting guidance for derivative instruments and hedging activities. These financial transactions are governed by our
policies covering acceptable counterparty exposure, instrument types and other hedging practices.
At inception, we formally designate and document qualifying instruments as hedges of underlying exposures. We formally assess, at inception
and at least quarterly, whether the financial instruments used in hedging transactions are effective at offsetting changes in either the fair value
or cash flows of the related underlying exposure. Fluctuations in the value of these instruments generally are offset by changes in the value or
cash flows of the underlying exposures being hedged. This offset is driven by the high degree of effectiveness between the exposure being
hedged and the hedging instrument. The ineffective portion of a change in the fair value of a qualifying instrument is immediately recognized in
earnings. The amount of ineffectiveness recognized is immaterial for all years presented.

Credit Risk Management
We have counterparty credit guidelines and generally enter into transactions with investment grade financial institutions. Counterparty
exposures are monitored daily and downgrades in counterparty credit ratings are reviewed on a timely basis. Credit risk arising from the inability
of a counterparty to meet the terms of our financial instrument contracts generally is limited to the amounts, if any, by which the counterpartys
obligations to us exceed our obligations to the counter- party. We have not incurred, and do not expect to incur, material credit losses on our
risk management or other financial instruments.
Certain of the Companys financial instruments used in hedging transactions are governed by industry standard netting agreements with
counterparties. If the Companys credit rating were to fall below the levels stipulated in the agreements, the counterparties could demand either
collateralization or termination of the arrangement. The aggregate fair value of the instruments covered by these contractual features that are
in a net liability position as of June 30, 2011, was $143. The Company has never been required to post collateral as a result of these contractual
features.
Interest Rate Risk Management
Our policy is to manage interest cost using a mixture of fixed-rate and variable-rate debt. To manage this risk in a cost-efficient manner, we
enter into interest rate swaps whereby we agree to exchange with the counterparty, at specified intervals, the difference between fixed and
variable interest amounts calculated by reference to a notional amount.
Interest rate swaps that meet specific accounting criteria are accounted for as fair value or cash flow hedges. For fair value hedges, the changes
in the fair value of both the hedging instruments and the underlying debt obligations are immediately recognized in interest expense. For cash
flow hedges, the effective portion of the changes in fair value of the hedging instrument is reported in OCI and reclassified into interest expense
over the life of the underlying debt. The ineffective portion for both cash flow and fair value hedges, which is not material for any year
presented, is immediately recognized in earnings.
Foreign Currency Risk Management
We manufacture and sell our products and finance operations in a number of countries throughout the world and, as a result, are exposed to
movements in foreign currency exchange rates. The purpose of our foreign currency-hedging program is to manage the volatility associated with
short-term changes in exchange rates.
To manage this exchange rate risk, we have historically utilized a combination of forward contracts, options and currency swaps. As of June 30,
2011, we had currency swaps with maturities up to five years, which are intended to offset the effect of exchange rate fluctuations on
intercompany loans denominated in foreign currencies. These swaps are accounted for as cash flow hedges. The effective portion of the changes
in fair value of these instruments is reported in OCI and reclassified into earnings in the same financial statement line item and in the same
period or periods during which the related hedged transactions affect earnings. The ineffective portion, which is not material for any year
presented, is immediately recognized in earnings.
The change in value of certain non-qualifying instruments used to manage foreign exchange exposure of intercompany financing transactions
and certain balance sheet items subject to revaluation is immediately recognized in earnings, substantially offsetting the foreign currency mark-
to-market impact of the related exposure.

Net Investment Hedging
We hedge certain net investment positions in foreign subsidiaries. To accomplish this, we either borrows directly in foreign currencies and
designate all or a portion of foreign currency debt as a hedge of the applicable net investment position or enter into foreign currency swaps that
are designated as hedges of our related foreign net investments. Changes in the fair value of these instruments are immediately recognized in
OCI to offset the change in the value of the net investment being hedged. Currency effects of these hedges reflected in OCI were an after-tax
loss of $1,176 and an after-tax gain of $789 in 2011 and 2010, respectively. Accumulated net balances were after- tax losses of $4,446 and
$3,270 as of June 30, 2011 and 2010, respectively.
Commodity Risk Management
Certain raw materials used in our products or production processes are subject to price volatility caused by weather, supply conditions, political
and economic variables and other unpredictable factors. To manage the volatility related to anticipated purchases of certain of these materials,
we may, on a limited basis, use futures and options with maturities generally less than one year and swap contracts with maturities up to five
years. These market instruments generally are designated as cash flow hedges. The effective portion of the changes in fair value of these
instruments is reported in OCI and reclassified into earnings in the same financial statement line item and in the same period or periods during
which the hedged transactions affect earnings. The ineffective and non-qualifying portions, which are not material for any year presented, are
immediately recognized in earnings.




Insurance
We self-insure for most insurable risks. However, we purchase insurance for Directors and Officers Liability and certain other coverage in
situations where it is required by law, by contract or deemed to be in the best interest of the Company.

Fair Value Hierarchy
Accounting guidance on fair value measurements for certain financial assets and liabilities requires that financial assets and liabilities carried at
fair value be classified and disclosed in one of the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs reflecting the reporting entities own assumptions or external inputs from inactive markets.
When applying fair value principles in the valuation of assets and liabilities, we are required to maximize the use of quoted market prices and
minimize the use of unobservable inputs. We calculate the fair value of our Level 1 and Level 2 instruments based on the exchange traded price
of similar or identical instruments where available or based on other observable inputs. The fair value of our Level 3 instruments is calculated as
the net present value of expected cash flows based on externally provided or obtained inputs. Certain Level 3 assets may also be based on sales
prices of similar assets. Our fair value calculations take into consideration the credit risk of both the Company and our counterparties. The
Company has not changed its valuation techniques used in measuring the fair value of any financial assets and liabilities during the year.
DISCONTINUED OPERATIONS
In October 2009, the Company completed the divestiture of our global pharmaceuticals business to Warner Chilcott plc (Warner Chilcott) for
$2.8 billion of cash, net have assumed and transferred liabilities. Under the terms of the agreement, Warner Chilcott acquired our portfolio of
branded pharmaceutical products, our prescription drug product pipeline and our manufacturing facilities in Puerto Rico and Germany. In
addition, the majority of the employees working on the pharmaceuticals business were transferred to Warner Chilcott. The Company recorded
an after-tax gain on the transaction of $1,464, which is included in net earnings from discontinued operations in the Consolidated Statement of
Earnings for the year ended June 30, 2010.
The pharmaceuticals business had historically been part of the Companys Health Care reportable segment. In accordance with the applicable
accounting guidance for the disposal of long-lived assets, the results of the pharmaceuticals business are presented as discontinued operations
and, as such, have been excluded from both continuing operations and segment results for all years presented.
In November 2008, the Company completed the divestiture of our coffee business through the merger of our Folgers coffee subsidiary into The
J.M. Smucker Company (Smucker) in an all-stock Reverse Morris Trust transaction. In connection with the merger, 38.7 million shares of
common stock of the Company were tendered by share- holders and exchanged for all shares of Folgers common stock, resulting in an increase
in treasury stock of $2,466. Pursuant to the merger, a Smucker subsidiary merged with and into Folgers and Folgers became a wholly owned
subsidiary of Smucker. The Company recorded an after-tax gain on the transaction of $2,011, which is included in net earnings from
discontinued operations in the Consolidated Statement of Earnings for the year ended June 30, 2009.
The coffee business had historically been part of the Companys Snacks, Coffee and Pet Care reportable segment, as well as the coffee portion of
our away-from-home business, which was included in the Fabric Care and Home Care reportable segment. In accordance with the applicable
accounting guidance for the disposal of long-lived assets, the results of Folgers are presented as discontinued operations and, as such, have been
excluded from both continuing operations and segment results for all years presented.














Journal Entries Related to Cost Accounting
Date Description Debit Credit
04/2011 Raw Material Inventory xxx
Merchandise Inventory xxx
Accounts Payable xxx
Inventory Purchase

Date Description Debit Credit
04/2011 Overhead Cost Pool xxx
Accounts Payable Xxx
Record Indirect Production Cost in OH

Date Description Debit Credit
04/2011 Work in Process Inventory xxx
Raw Material Inventory xxx
Transfer of Raw Material to Inventory

Date Description Debit Credit
04/2011 Overhead Cost Pool xxx
Work in Process Inventory xxx
Record Inventory Scrap and Spoilage

Date Description Debit Credit
04/2011 Finish Goods Inventory xxx
Work in Process Inventory xxx
Record Finished Goods

Date Description Debit Credit
04/2011 Work in Process Inventory xxx
Finished Goods Inventory xxx
Cost of Goods Sold xxx
Overhead Cost XXX
Allocate Overhead

Date Description Debit Credit
04/2011 Cost of Goods Sold Expense xxx
Obsolescence Reserve xxx
Obsolete Inventory Entree

Date Description Debit Credit
04/2011 Work in Process Inventory xxx
Raw Material Inventory xxx
Transfer of Raw Material to Inventory









Thoughts of internal reports you would expect related to
cost accounting
Productivity and Cost Savings Plan
In February 2012, the company announced a $10 billion productivity and cost savings plan to reduce costs and better leverage scale in the areas
of supply chain, research and development, marketing and overheads. The program was designated to accelerate cost reductions by streaming
management decision making, manufacturing and other work processes to fund the Companys growth and strategy. As part of this plan the
Company expects to incur approximately $3.5 billion in before-tax restructuring costs over a four year period (from fiscal 2012 through fiscal
2015). More than half of the costs will be incurred by the end of fiscal 2013 and the remainder in fiscal years 2014 and 2015. Savings generated
from the restructuring costs are difficult to estimate, given the nature of the activities, the corollary benefits achieved, the timing of the
execution and the degree of reinvestment. Overall, all costs are expected to deliver approximately $2 billion in before-tax annual savings. The
before-tax savings in the current year are not material due to the timing of the plan.
Driving Productivity and Cost Savings
Productivity is the great enabler that allows us to invest in leadership levels of consumer understanding and innovation, ensure our brands are
priced competitively, overcome macro headwinds and deliver bottom-line growthsimultaneously. Earlier this year, the company announced
our objective of delivering$10 billion in cost savings by the end of fiscal year 2016. This program includes $6 billion of savings in cost of goods
sold, $1 billion from marketing efficiencies, and $3 billion from nonmanufacturing overhead.
Cost of Goods Sold Schedule is one of the internal reports related to cost accounting. Cost of goods sold (COGS) refer to the inventory
costs of those goods a business has sold during a particular period and, therefore, transferred from Finished Goods Inventory on the
balance sheet to Cost of Goods Sold on the income statement. Costs include all costs of purchase, costs of conversion and other costs
incurred in bringing the inventories to their present location and condition. Costs of goods made by the business include material, labor,
and overhead. The costs of those goods not yet sold are deferred as costs of inventory until the inventory is sold or written down in
value.
Cost of goods manufactured schedule is the total cost of goods completed during the period and transferred to finished goods
inventory. Manufacturing companies transform raw material into finished goods through the use of labor and factory facilities. For
example, a company manufacturing furniture from wood or timber. The income statement prepared by a manufacturing company
requires the calculation of cost of goods manufactured.

Budgets are the comprehensive financial plan for the organization as a whole.
o Sales Budgets
o Production Budget
o Purchased Budget
o Labor Budget
o Manufacturing Overhead Budget
o Selling and Administrative Budget
o Cash Budget













Thoughts as to what concepts/techniques could be used to
evaluate whether they are meeting their goals/ objectives.

We will provide branded products and services of superior quality and value that improve the lives of the worlds consumers. As a result,
consumers will reward us with leadership sales, profit, and value creation, allowing our people, our shareholders, and the communities in which
we live and work to prosper. As the mission statement articulate, the main goal for the company is to be the quality, sales and consumer value
market leader. We are planning to focus on the company resources to achieve these objectives.
As well to evaluate the company performance semiannually to see if the strategies the company is applying are meeting goals and objectives.
Referring to sales objectives we can examine our financial ratios, for example the inventory turn-over ratio to see how many days it takes to
sell the inventory on hand; also we can compare to the last years company ratios to review if the company is improving or declining, and/or we
can compare to our market competitors to see how much advantage or disadvantage the company has.
P&G Company can evaluate the quality of the products by doing quality research studies to see if their products are meeting and exceeding the
standard quality qualifications. Last but not least, P&G need to evaluate their customer value applying different techniques, such as training
employees, calls to customer after purchase and/ or surveys to see if customer satisfaction was achieved. Customer satisfaction usually leads to
customer loyalty and product repurchase.






Thoughts as to what concepts/techniques could be used
when making decisions about future actions.

Procter and Gamble might believe that a certain concept or technique they are currently could help them make a better decision about future
actions within the company; but in our opinion we believe that if they could focus some of their attention to relevant costing they might be able
to make a wiser choice. Relevant costing focuses managerial attention on a decisions relevant information. Relevant costing techniques are
applied in virtually all business decisions in both short-term and long-term contexts. Proctor and Gamble might examine the application of
relevant costing techniques to recurring business decisions, such as replacing an asset, outsourcing a product or part, allocating scarce
resources, manipulating sales mix, or evaluating specially priced orders.

In decision making, managers should consider all relevant costs and revenues associated with each decision alternative. In this process, there is a
relationship between time and relevance. For information to be relevant, it must possess three characteristics: be associated with the decision
under consideration; be important to the decision maker; and have a connection to, or bearing on, some future endeavor. As the decision time
horizon is reduced, fewer costs and revenues are relevant because the majority of such amounts cannot be changed by short-term management
actions. In the longer term, management action can influence virtually all costs. Regardless of whether the decision is a short- or long-term one,
all decision making requires analysis of relevant information.