Topic _8 Summary - To: Dr. Tidrick From: Wenjing Li, Chen...

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To: Dr. Tidrick From: Wenjing Li, Chen Liang, Kevin Xu Date: April 8, 2011 Subjective: Executive Summary on PCFRC Differences between the Private Company and the Public Company A public company is one whose stock is traded by the public. A private company is one whose stock is generally held by a small group of shareholders or by the company members. The private company is used to be considered as smaller size, less revenue, and no financial statement disclosure requirement comparing to the public company; however, for the purpose of financing from external sources, such as banks and investment companies, private companies are normally required to prepare financial statements. If the financial statements are going to be used to obtain credit, then how to disclose this information to make them acceptable to those decision makers becomes a big issue for private companies. Old Debate in 1970s -- “Big GAAP” vs. “Small GAAP” For many years, it has been proposed that if the same accounting standards should be required for both public and private companies. Small business owners, accountants, and others have argued the need for different accounting standards to be used by smaller, privately held companies as a replacement for the complex and burdensome standards issued by the Financial Accounting Standards Board (FASB). Opponents, on the other hand, have argued for only one set of accounting standards, pleading that multiple accounting standards could only lead to confusion and a lack of credibility for issuers of financial statements prepared under “lesser” standards. What is PCFRC?
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This note was uploaded on 04/22/2011 for the course ACCY 360 taught by Professor T during the Spring '08 term at Northern Illinois University.

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Topic _8 Summary - To: Dr. Tidrick From: Wenjing Li, Chen...

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