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Chapter 2 - Chapter 2 Qualities of Accounting Information 1...

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2-1 1 Chapter 2 Qualities of Accounting Information 2 Securities and Exchange Commission (SEC) has the legal authority to set the accounting rules for companies that are publicly traded. The SEC has delegated that responsibility to the accounting profession. Currently, the Financial Accounting Standards Board (FASB) is the standards- setting body. Who Sets the Rules?
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2-2 3 GAAP (not a clothes store) Generally Accepted Accounting Principles (GAAP) are the rules that most companies follow in preparing their financial reports. GAAP are not exact rules: professional judgment is needed. Statements of Financial Accounting Concepts provide the basis and guidance for establishing accounting standards. 4 Statements of Financial Accounting Concepts Objectives of accounting information Qualitative characteristics of accounting information Elements of financial statements Recognition and measurement in financial statements
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