Chapter 1 - Chapter 1 How standards are made the process of...

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Chapter 1 How standards are made; the process of creating GAAP 1. What is the objective of financial reporting? a. Financial reporting refers to conveying financial information to investors, creditors, and other external users. This is done through financial statements. b. The objective of general purpose financial reporting is to provide financial information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors in making decisions in their capacity as capital providers. Information that is decision useful to capital providers may also be useful to other users of financial reporting information who are not capital providers. 2. For whom do we prepare external statements? (Balance sheet, Income statement, etc.?) a. Investors, creditors, anybody outside of the company. 3. Statement of Financial Concepts a. 4. a. Underlying Assumptions a.i. Economic entity – anything in financial statement lists only its own assets, liabilities,
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