Chapter_1_and_2_intermediate

Chapter_1_and_2_intermediate - Chapter 1 and 2 (these two...

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Chapter 1 and 2 (these two chapters are all about definitions) Financial Accounting and Accounting Standards and Conceptual Framework
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Learning Objectives 1. Identify the major financial statements and other means of financial reporting. 2. Explain how accounting assists in the efficient use of scarce resources. 3. Describe some of the challenges facing accounting. 4. Identify the major policy-setting bodies and their role in the standard-setting process. 5. Describe the impact of user groups on the standard- setting process. 6. Understand issues related to ethics and financial accounting.
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Financial Accounting Financial accounting is the process that culminates in the preparation of financial reports on the enterprise for use by both internal and external parties. Financial statements are the principal means through which a company communicates its financial information to those outside it. The financial statements most frequently provided are (1) the balance sheet, (2) the income statement, (3) the statement of cash flows, and (4) the statement of owners’ or stockholders’ equity. Other means of financial reporting include the president’s letter or supplementary schedules in the corporate annual report, prospectuses, and reports filed with government agencies.
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Objectives of Financial Accounting The objectives of financial accounting are to provide information that: a. is useful to present and potential investors and creditors and other users in making rational investment, credit, and similar decisions; b. helps present and potential investors, creditors, and other users assess the amounts, timing, and uncertainty of prospective cash receipts from dividends or interest and the proceeds from the sale, redemption, or maturity of securities or loans; and c. clearly portrays the economic resources of an enterprise, the claims to those resources, and the effects of transactions, events, and circumstances that change its resources and claims to those resources.
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AICPA The first group appointed by the AICPA to address the issue of uniformity in accounting practice was the Committee on Accounting Procedure (CAP). This group served the accounting profession from 1939 to 1959. During that period it issued 51 Accounting Research Bulletins (ARBs) that narrowed the wide range of alternative accounting practices then in existence. In 1959, the AICPA created the Accounting Principles Board (APB) . The major purposes of this group were (a) to advance the written expression of accounting principles, (b) to deter- mine appropriate practices, and (c) to narrow the areas of difference and inconsistency in practice. The APB was designated as the AICPA’s sole authority for public pronouncements on accounting principles. Its pronouncements, known as APB Opinions, were intended to be based mainly on research studies and be supported by reasons and analysis.
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FASB The mission of the FASB is to establish and improve standards of financial accounting
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Chapter_1_and_2_intermediate - Chapter 1 and 2 (these two...

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