ACC 230 - hw 1 - Aaron New Accounting 230 - Homework 1 June...

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Aaron New Accounting 230 - Homework 1 June 1, 2010 Chapter 1 Q5) Why is accounting often referred as the “language of business”? It is because accounting is the recording, summarizing and reporting of all the transactions and data of a business. Accounting provides information and function a form of communication and thus a language. Q7) What are generally accepted accounting principles (GAAP)? Who currently develops and issues GAAP? What is the purpose of GAAP? It is the common agreement on the rules and regulations held by the SEC, IRS, and AICPA. Currently, the Financial Accounting Standard Board is the rules maker. It is the basic guidelines for accountants to follow when preparing financial reports. Q8) Why is it important for financial statements and other external reports to be based on generally accepted accounting principles? It gives investors the advantage of comparing the similar format on the financial statements and other external report, knowing the reports are formal and regulated as well as reliable. Also, it helps investors look for data knowing where to look for it in the reports or statements if the company follows GAAP. Q11) Ethical considerations affect all society. Why are ethical considerations especially
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ACC 230 - hw 1 - Aaron New Accounting 230 - Homework 1 June...

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