WEEK3_lecture_spring2012 - Today’s topics •...

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Unformatted text preview: Today’s topics • Codification (brief introduction) • GAAP • AUDIT Process • Codification (drill-down) 2 Codification ACCOUNTING STANDARDS • It should be noted that although the FASB has stated that the FASB Codification supersedes existing references in U.S. GAAP, the FASB Codification does not supersede Commission rules or regulations. – Aug. 18, 2009 Commission Guidance Regarding the Financial Accounting Standards Board's Accounting Standards Codification • What is GAAP? 5 TODAYS TOPIC – “GAAP” • … Generally accepted accounting principles (GAAP) are concerned with the: • measurement of economic activity , the time when such measurements are to be made and recorded, the disclosures surrounding this activity , and • the preparation and presentation of summarized economic information in the form of financial statements . Why does GAAP change?? • GAAP develops when questions arise about how to best accomplish those objectives – measurement, – timing of recognition , – disclosure , or – presentation . • In response to those questions, GAAP is either prescribed in official pronouncements of authoritative bodies empowered to create it, or it originates over time through the development of customary practices that evolve when authoritative bodies fail to respond. TWO broad categories of accounting principles Recognition principles determine the timing and measurement of items that enter the accounting cycle and impact the financial statements. These are quantitative standards that require economic information to be reflected numerically. Disclosure principles deal with factors that are not always numeric. Disclosures involve qualitative information that is an essential ingredient of a full set of financial statements IN A NUTSHELL • Thus, GAAP is a reaction to and a product of...
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This note was uploaded on 03/06/2012 for the course GEO 505 taught by Professor Johnschmidt during the Spring '12 term at CUNY Graduate School of Journalism.

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WEEK3_lecture_spring2012 - Today’s topics •...

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