Accounting Principles And Financial Statements - 1682 Words

Statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP), which refers to a set of rules, standards, and practices. They are used throughout the accounting industry to prepare and standardize financial statements that are issued and help investors and creditors compare companies within the same industry. Companies are expected to follow generally accepted accounting principles when they report their financial information. GAAP affects the measurement of economic activities and the disclosure of information about activities. It also affects the preparation and summarization of economic information, and the record keeping of measurements at average intervals. Other than the numbers on the balance sheet, income statement, and statement of cash flows, a great deal of information is provided in the notes to the financial statements. They contain information that may be significant and include tables which are included as a footnote. The notes will contain information about the company accounting policies, including information on securities held, inventories, debt, and other elements which can determine a company s financial position. Under GAAP, companies often have discretion to use varying methods for valuing assets, and recognizing costs and revenue. The Summary of Significant Accounting Policies appears as the first note to the statement or in a separate section. Accounting control procedures are systems designed to ensure all employeesShow MoreRelatedWorking With Financial Statements : Accounting Principles1415 Words   |  6 Pages Working with Financial Statements Accounting principles are like the Ten Commandments to a CPA. The principles are recommendation or instructions on what an account should follow when logging and informing on all accounting transactions. Businesses rely on their account every month to maintain the financials records of the company. At the end of each month, it is important for every transaction to be documented and posted as a financial entry in the monthly trail balance. An account needs to ensureRead MoreBasic Financial Statements Under Generally Accepted Accounting Principles1820 Words   |  8 PagesUnderstanding Basic Financial Statements Companies report their financial activities in four basic financial statements under generally accepted accounting principles (GAAP). The four basic financial statements are as listed below: 1. The balance sheet shows in a tabular form, the asset, liability and owners’ equity of a company, at a particular time. The assets of a company will always equal to the sum of liabilities and owners’ equity, this is called the accounting equation. i.e Asset = liabilityRead MoreThe Accounting Principles Of Financial Statements And Balance Sheet And Valuations For The Health Care Organization976 Words   |  4 PagesAccounting in health care has profound effects on financial statements, and knowing the necessary components to conducting financial reports and balancing the assets is vital. Many things contribute to the overall foundation of the balance sheet and valuations for the health care organization. A lot of moving parts are required to keep health care organizations running and afloat for the long-term. One must understand the accounting concepts, and methods, terminology, in order to explain the variousRead MoreSummary of Research for Accounting Changes and Error Analysis1143 Words   |  5 PagesResearch for Accounting Changes and Error Analysis Companies have always faced issues of how to reflect changes in accounting methods and error corrections in financial statements. A change in accounting principle results when an entity adopts a generally accepted accounting principle different from the one it used previously (Hall 2007). A presumption exists that an accounting principle once adopted shall not be changed in accounting for events and transactions of a similar type (Financial AccountingRead MorePrinciples and Assumptions Used in Preparing Accounting Statements1605 Words   |  7 PagesIntroduction 1. definition of accounting: [2] *Accounting is a set of principles and procedures relating to the registration and compilation, analysis and interpretation of financial data for the purpose of determining the outcome of business and its financial position. * A method of recording and tabulating and summarizing operations and financial events and then interpret the results. *Body: 2.Assumptions used in accounting: [1] What assumptions used in accounting is generally predict solutionsRead MoreBAF 301 Accounting and financial management Assignment 1 Mohammad Gholamali 20101147 Dr. Suja900 Words   |  4 PagesBAF 301 Accounting and financial management Assignment 1 Mohammad Gholamali 20101147 Dr. Suja Sarah Thomas Colleague of Electrical Electronics Engineering Introduction In this report I am going to write some of the important principle and assumption and guidance used to prepare accounting statements. In the world of business there are some general rules and principles which the universe of accounting uses them as a general guidance. There are some international framework like Financial accountingRead MoreAccounting Principles And Its Impact On Accounting1210 Words   |  5 Pages revised accounting standards require companies to change accounting methods. The three categories for changes are accounting principles, estimates, and reporting entity. Change in accounting principles happens when a company changes from one generally accepted accounting principle to another. For instance, Company A uses FIFO inventory cost method but decides to uses LIFO instead. Revision of an estimate because of new information or new experience is called change in accounting estimate.Read MorePrinciples Of Gaap And Ifris1742 Words   |  7 PagesPrinciples of GAAP and IFRIS GAAP- GAAP (generally accepted accounting principles) is a collection of commonly-followed accounting rules and standards for financial reporting. Principles regarding GAAP 1. Economic Entity Assumption The accountant keeps all of the business transactions of a sole proprietorship separate from the business owner s personal transactions. For legal purposes, a sole proprietorship and its owner are considered to be one entity, but for accounting purposes they are consideredRead MoreGeneral Accepted Accounting Principals Essay735 Words   |  3 PagesGenerally Accepted Accounting Principles Health care organizations financial statements are the key tools to show the economic stability of an organization and guide leadership in making informed decisions. The Generally Accepted Accounting Principles (GAAP) is basic assumptions, and principles of accounting to determine the financial position of an organization. These principles offer consistency across health care organizations, and businesses maintaining track of the organizations fiscalRead MoreEthical and Legal Obligations in Accounting1329 Words   |  6 PagesMarshall (2004), accounting is the process of identifying, measuring, and communicating economic information about an organization for the purpose of making decisions and informed judgements (p. 3). Specifically, financial accounting refers to the process that results in the preparation and reporting of financial statements for an entity (Marshall, McManus, Viele, p. 5). While many entities prepare their own financial statements, firms can also contract with a public accounting firm or a Certified