Panies as well as comparative financial information

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panies as well as comparative financial information on competing companies and business opportunities. Investment analysts and other information intermediaries, such as the financial press and business commentators, are interested in predicting companies' future performance. Banks and other lenders demand financial accounting information to help determine loan terms, loan amounts, interest rates, and required collateral. Shareholders and directors demand finan- cial accounting information to assess the profitability and risks of companies. Customers (both current and potential) demand accounting information to assess a company's ability to provide products and/or services as agreed and to assess the company's staying power and reliability. Regulators (such as the SEC, the Federal Trade Commission, and the Federal Reserve Bank) and tax agencies demand accounting information for antitrust assessments, public protection, price setting, import-export analyses, and establishing tax policies. Voters and their represen- tatives to national, state, and local governments demand accounting information for policy decisions. To satisfy these varying demands for and uses of financial information, companies prepare general-purpose financial statements, which refer to financial statements aimed to satisfy informational needs of a generic user. IFRS INSIGHT Development of Inte!:!!!!.tio~andards The accounting standards explained in this book are consistent with generally accepted account- ing principles (GAAP) primarily developed by the Financial Accounting Standards Board (FASB). A similar organization, the International Accounting Standards Board (lASB), develops a global set of International Financial Reporting Standards (IFRS) for preparation of financial statements. To increase comparability of financial statements and reduce reporting complexity, the Securities Exchange Commission (SEC), the FASB, and the IASB are committed to a process of convergence to one set of world accounting standards. As we progress through the book, we will provide IFRS Insight boxes like this to identify differences between GAAP and IFRS. Supply of Information In general, the quantity and quality of accounting information that companies supply are determined by managers' assessment of the benefits and costs of disclosure. Managers release information provided the benefits of disclosing that information outweigh the costs of doing so. Both regulation and bargainingpower affect disclosure costs and benefits and thus play roles in determining the sup- ply of accounting information. Most areas of the world regulate the minimum levels of accounting disclosures. In the U.S., publicly traded firms must file financial accounting information with the Securities Exchange Commission (SEC). The two main compulsory SEC filings are: Form lOoK: the audited annual report, which provides a comprehensive overview of the com- pany for the past year; includes the four financial statements, discussed below, with explana-
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