Accounting Principles And Financial Statements

As accountants and auditors we are held to, and must comply with, two standards of professional conduct. Those standards are generally accepted accounting principles (GAAP) and generally accepted auditing standards (GAAS). GAAP enforces the uniform standards for preparing and presenting financial statements. GAAS governs the ways and means are used by public accountants when conducting an audit. GAAS establishes the standards for field work and mandates that sufficient evidence be found to provide reasonable assurance for issuing an audit opinion.

GAAP (Generally Accepted Accounting Principles) determine the content and format of financial statements. SEC (Securities and Exchange Commission) requires publicly traded companies to issue annual audit. Concerns are about adequacy of disclosure; and behavioral implications are secondary.

Slide 3: Financial statements for public companies are compiled according to Generally Accepted Accounting Principles, or GAAP. This is mandated by the Securities and Exchange Commission as a means of ensuring that companies produce these statements consistently. That allows investors to easily compare different companies when they are

GAAP is exceptionally useful because it attempts to regulate and normalize accounting definitions, assumptions, and methods. Because of generally accepted accounting principles one is able to presuppose that there is uniformity from year to year in the methods that are used to prepare a

Managerial accounting is mostly used by organizations for purposes of internet alone. The format it uses may not be conforming to the standardization by GAAP. Flexibility is offered for by the system so as the corporate can oversee needs for future and purposes of planning. Managers use managerial accounting to implement decisions that are concerned with the daily operations of an organization. It relies a lot based on past performance but on trends that are current and future and do not give an allowance of exact numbers. Financial accounting is closely related to GAAP. Standardization is necessary for accommodation of outside agencies might be in need of this information. It is not useful in any way to predict the future. Management account relies a lot on the future market trends, and managers are faced with the difficulty of making critical decisions within a short period in a fluctuating environment (Holgate, 2006).

Changes are inevitable. Things such as the economy, development, or technological advances constantly transform operations and the flow of information about operations. As a result, revised accounting standards require companies to change accounting methods. The three categories for changes are accounting principles, estimates, and reporting entity.

In the last few years, the issue of financial regulations has been increasingly brought to the forefront. This is because of a number of high profile scandals are highlighting how abuses are occurring from the lack of regulation. A good example of this can be seen with adjustable rate mortgages (ARMs). In the early 2000s, this was considered to be an effective way for many low income and minority families to purchase a home. However, as the economy began to slow is when interest rates were reset higher. This resulted in the many of these assets being sold to investors as safe, income orientated securities. (Government Regulations 2008)

As indicated previously, this manual consists of 14 modules designed to facilitate your study for the

Generally Accepted Accounting Principles (GAAP), are guidelines that allow each accountant supervision upon financial reporting. It stimulates a cohesive environment to comprehend all aspects of finances in various business. The standard that FASB has worked identifies the sources of accounting principles and the blueprint for choosing which principle to use in the preparation of financial statements. According to Intermediate Accounting Wiley, the standard categorizes the major sources of GAAP consist

2. The two main types of companies permitted to be registered under the Corporations Act are:

Financial statements have several key components and specific criteria into them to relay the detailed information for auditors and management. A deeper look into financial statements and the many concepts surrounding them are needed to explain in more detail. It’s also important to recognize the Auditor’s opinion letter, balance sheet, operating statement, statement of changes in net assets, and statement of cash flows and footnotes of their involvement in the process. Relevant accounting articles are a useful supplement to financial statements and how they enhance concepts in the financial statement. The meaningful uses of financial statements for health care organizations are the epitome of current and future success of financial health.

When a company reports its financial reports, the information is expected to be reliable, verifiable, consistency, and comparability when applying accounting principles and procedures. The accounting principles and procedures directly affect the company’s balance sheet and it financial statement by depending on hot it’s prepared and interpreted. If there are any changes in the accounting principles and procedures when preparing the financial statements, it should be notified and documented any changes that made to the company’s accounting practices. Therefore, this paper is going to address about a company that has decided to change its accounting method of depreciation to a declining balance method and weather its decrease net income or not, results of changes in principle or estimate, importance of choosing the accounting methods, and the influence of errors and corrections in the financial statements.

Financial statements provide information of value to company officers and various external parties, such as investors and lenders of funds. Publicly owned companies are required to publish general-purpose financial statements that include a balance sheet, income statement, and statement of cash flows. Financial statements issued for external distribution are prepared according to generally accepted accounting principles (GAAP).

The purpose of financial statement is to provide entities form employee’s to government organizations to include all stakeholders viable and reliable information that effects strategic decisions. With the differences between the U.S. GAAP and IFRS pose problems over the an acceptable accounting flaws that exist with in standards of accounting practice relevant to manipulate the system that has been adopted. Via Turner Investments (2016) a CPA blogger says "Anyone who believes all countries can embrace international accounting standards and use those standards in the same way is dumber than a sack of rocks, The New York Times Web site.” Additionally, as cited by Hassan (2015) of Zhou and Chen that “the reason why banks manipulate earnings is supported by three arguments: signaling argument, income smoothing or earnings management argument and capital management argument” (p. 93). Further in concern, is a statement by American Institute of Certified Public Accountants (AICPA) that the “U.S. GAAP must go” declared in Forbes.com that the system can “collapse under its own weight” due to playing and construing financial records (Turner Investments, 2016). The regulation heavy U.S GAAP bares constraints and needs to be more user-friendly as with the IFRS standards given way to a universal international accounting system reflective of the times we live in.

Generally accepted accounting principles (GAAP) consist of various rules and principles which are used for