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

Financial Accounting For Merck, the company is based in the U.S. And uses the U.S. generally accepted accounting principles (GAAP) to compile its financial statements. Novartis is based in Switzerland, and it uses international financial reporting standards (IFRS) to prepare its financial statements. It is allowed to use this as foreign firm, even though it has a cross-listing on the New York Stock Exchange, but it files a different form, the 20-C,

Accounting The role of financial statements in investing is that they provide a consistent format that can be used by potential investors and other stakeholders to evaluate a company. There are several components that facilitate this happening. For publicly-traded firms, Generally Accepted Accounting Principles (GAAP) play a key role in the creation of financial statements. GAAP is a common set of accounting principles and procedures that companies use to compile their

Accounting internal control is the methods and procedures used to ensure the accuracy and validity of the financial statements, as well as to protect against abuse and fraud, making sure information is delivered in an accurate and timely manner. (Griffin) Internal controls consist of information systems and physical controls that are carried out in the line of job duty. The two primary goals of internal control is to ensure that

Accounting In just about any part of the world, accrual accounting is preferred by government over cash accounting, for several good reasons. To understand these reasons, the first step is to understand what the difference is between accrual accounting and cash accounting. Cash accounting is a standard form of accounting for very small businesses and for households, where the entire basis of accounting is the cash flows in and out. Under