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ACC 321- Exam #1 Review

ACC 321- Exam #1 Review - ACC 321 Exam#1 Review How is GAAP...

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ACC 321- Exam #1 Review How is GAAP determined? Generally Accepted Accounting Principles. Common set of rules, standards and procedures. GAAP is a codification of how CPA firms and corporations prepare and present their business income and expense, assets and liabilities on their financial statements SEC requires registrants to adhere to GAAP Standard setters-- responsibilities, differences, and future FASB- Financial Accounting Standards Board o Mission: To establish and improve standards of financial accounting, and reporting for the guidance and education of the public (issuers, auditors, and users of financial information) o Only answers to the Financial Accounting Foundation (FAF) o Rules based o Must make improvements in financial reporting, simplify the accounting literature and the rule-making process, and have international convergence SEC- Securities and Exchange Commission o Helps develop and standardize financial information presented to stockholders o Relies on the FASB to develop accounting standards o Publicly traded companies or those listed on a stock exchange are required to file audited financial statements with the SEC IASB-International Accounting Standards Board o Principles based o Make their existing financial reporting standards fully compatible as soon as practiced o Coordinate their future work programs to ensure that once achieved, compatibility is maintained AICPA- American Institute of Certified Public Accounts o The national professional organization of practicing Certified Public Accountants FASB codification o The documents that comprise GAAP vary in format, completeness, and structure o Goal: to provide in one place all the authoritative literature related to a particular topic Conceptual Framework A coherent system of interrelated objectives and fundamentals that can lead to consistent rules and that prescribe the nature, function, and limits of financial accounting and financial statements The framework should increase financial statement users’ understanding of
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and confidence in financial reporting Purpose, benefits, weaknesses Objectives of financial reporting Provide information that is: Useful to those making investment and credit decisions who have a reasonable understanding of business and economic activities Helpful to present and potential investors, creditors, and other users in assessing the amounts, timing, and uncertainty of future cash flows About economic resources, the claims to those resources, and the changes in them Qualitative characteristics By determining which alternative provides the most useful information for decision purposes Characteristics include: distinguish better information from inferior information for decision making purposes Basic assumptions, principles, constraints Assumptions
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ACC 321- Exam #1 Review - ACC 321 Exam#1 Review How is GAAP...

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