¶ … validity of establishing Section 115 by the FASB. It has 4 sources. The FASB (Financial Accounting Standards Board) in the recent years have revised many accounting standards and policies to effectively govern corporations for the benefit of the public. In its attempt to curtail the unaccounted for incomes and earnings, the FASB issued the FASB No.115 section in which it states that companies reporting their financials can determine their investment securities as held-to-maturity, available-for-sale or trading. In differentiating the categorization of the securities, the FASB establishes the securities either as an income statement item or a balance sheet item. The gains or loss derived from either of the categorization is considered to be different in their nature in reportage as well as in their taxation. The need for differentiation stemmed from FASB's justification that investment accounting of debt and equity are often subjected to taxation. Items of financial statements come under financing activities, involve interest income or expense whereby the company may report it as unrealized gains or losses to increase or decrease their income. Whereas the FASB, to negate this effect specifically categorizes securities as item of earnings or not earning. Since securities available-for-sale can derive interest income and thereby affect the dividends sent out they are considered to be equity....
On the other hand the trading securities are those that base earnings on the face value and the realized gains or losses less the tax effects. While held to maturity securities are those securities whose income is dependent on the period of maturity and is considered to be part of the balance sheet and valued at amortized cost [Felt 2000].
Accounting Ethics Ethics of Accounting There have been breaches in the ethics of accounting in recent times. With that in mind, evaluate whether or not the current trend in the regulation of business establishments is favorable to ethical behavior. Supply supportive evidence to your answers (Jeter, 2003). The generally accepted principles of accounting and the standards of auditing in contemporary practice stipulate that the financial statements of any establishment should contain the following
Accounting What is Accounting Accounting is a term which is usually referred to when there is a formalized manner to hold an individual, firm or other organization to account. The process of accounting will usually involves the collection of data that measures or quantifies actions or transactions, to allow for an evaluation or assessment of performance. The most common type of accounting will be used to measure and quantify financial data. A
Accounting Approaches: Deductive vs. Inductive Approaches Two major divisions exist regarding the classification of accounting approaches: the inductive and deductive method. "In the deductive or judgmental approach, relevant environmental factors are identified, and, by linking these to national accounting practices, international groupings or development patterns are proposed. In the inductive or empirical approach, individual accounting practices are analyzed, development patterns or groupings are then identified, and finally explanations keyed to a
Accounting in Australia: Accounting basically incorporates the recording of events as well as the organization and detailing results, which is the main medium in discharging accountability. Accounting has developed to become an important element of the business fabric and economic development of a country and its organizations and institutions. This element has developed as a profession and business practice that is closely linked with the considerable economic development in Australia for
Accounting Qualitative Characteristics of Financial Statements There are four principal qualitative characteristics that make the information provided in financial statements useful to users. These are understandability, relevance, reliability and comparability. The first section of this paper will be dedicated to explaining each of these concepts and how they relate to making financial statements more valuable for the audience. The first principal qualitative characteristic is understandability. This relates not only to the information but
Accounting Several terms and definitions are valuable to understand financial statements. In the United States, financial statements of public corporations are produced in accordance with the U.S. Generally Accepted Accounting Principles. These principles govern how the information for financial statements is compiled and presented. The purpose of these principles is so that all stakeholders can easily understand the statements and make comparisons across both time and across different companies, because the
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now