AC300_Finley_Joey_The_Environment_of_Financial_Framework_Unit_2

AC300_Finley_Joey_The_Environment_of_Financial_Framework_Unit_2

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Running head: THE ENVIRONMENT OF FINANCIAL FRAMEWORK 1 The Environment of Financial Framework Joey Finley Kaplan University Intermediate Accounting I AC300 Paula Beiser August 11, 2011
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The Environment of Financial Framework 1) A friend of yours says, “I understand there are ‘rules’ for financial reporting. But what are these rules, where can a person find them, and which ones are more important?” Prepare an answer for your friend. a) GAAP are a combination of authoritative standards and simply the commonly accepted ways of recording and reporting accounting information. b) GAAP are imposed on companies so that investors have minimum level of consistency in the financial statements they use when analyzing companies for investment purposes. GAAP cover such things as revenue recognition, balance sheet item classification and outstanding share measurements. Companies are expected to follow GAAP rules when reporting their financial data via financial statements. If a financial statement is not prepared using GAAP principles, be very wary.
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