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510chapter1-2falls2009bb - Intermediate Accounting I(in a 3...

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Welcome to Accounting 5100 Intermediate Accounting I (in a 3 part series)
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Chapter 1: Financial Accounting and Accounting Standards
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What is Important? Characteristics of accounting Objectives of financial reporting Parties involved in standard setting What are Generally Accepted Accounting Principles House of GAAP (not on exam)
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Chapter Overview Financial Statements and Financial Reporting Accounting and Capital Allocation Challenges Objectives The Need to Develop Standards Parties Involved in Standard Setting Generally Accepted Accounting Principles Issues in Financial Reporting Securities and Exchange Commission (SEC) American Institute of Certified Public Accountants (AICPA) Financial Accounting Standards Board (FASB) Governmental Accounting Standards Board (GASB) Changing Role of the AICPA Political Environment The Expectations Gap International Accounting Standards Ethics
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Characteristics of Accounting Essential characteristics of accounting are: (1) the identification , measurement , and communication of financial information about (2) economic entities to (3) (3) interested interested parties parties.
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Financial Information Accounting? Identifies and Measures and Communicates Balance Sheet IncomeStatement Statement of Cash Flows Statement of Owners’ or Stockholders’ Equity Note Disclosures President’s letter Prospectuses, SEC Reporting News releases Forecasts Environmental Reports Etc. GAAP Not GAAP Financial Statements Additional Information Economic Entity Characteristics of Accounting
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Challenges Facing Accounting Non-financial Measurement : To adequately assess performance, liquidity and stability, other non-financial forms of information will need to beavailable. Forward-looking information : Accounting relies on, as morereliable, past events (historical costs) rather than expected or projected values or events. Someconsideration of tomorrow will haveto beconsidered to enhancetheusefulness of accounting information.
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Challenges Facing Accounting Soft-assets : Assets besides “hard” property, plant and equipment groupings will need to beconsidered farther. Human resourceaccounting, valuing a trained, dedicated work force, theentrepreneurial spirit, arenot presently valued on thefinancial statements today. Timeliness : Financial statements havebeen prepared only quarterly, and audited financials provided only annually. Littleor no real-timefinancial statement information has been available.
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Financial reporting should provide information: (a) that is useful to present and potential investors and creditors and other users in making rational investment, credit, and similar decisions. (b) to help present and potential investors and creditors and other users in assessing theamounts, timing, and uncertainty of prospectivecash receipts.
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