Accounting Principles
To expressly explain the similarities and differences that exist between the GASB and FASB accounting standards it is imperative that we first examine the philosophical approaches that the boards have taken (Marsh & Fischer, 2011). These are found in the board's concept statements. The boards use the concept statements to develop accounting standards. The FASB conceptual framework focuses on provision of best information that influences decisions made by creditors, investors, and entities interested in commercial and not-for-profit activities. The GASB's framework, on the contrary, focuses on accountability and opposed to aiding in decision making processes (Marsh & Fischer, 2011).
Areas of potential differences between GASB and FASB lie in recognition, measurement, display, and disclosure. ecognition differences arise on whether an item should or should not appear in a financial statement. In as much as SFAS No. 116(1993a) addressed contributed services, the GASBS No. 33(1998) failed to (Marsh & Fischer, 2011).…...
mlaReference List
Marsh, T. & Fischer, M. (2011). FASB/GASB Recognition and Reporting Differences: A
Nonprofit Sector Perspective. Journal of Accounting and Finance, 11(1).
GAAP
Generally Accepted Accounting Principles in Health Care
GAAP (generally accepted accounting principles) in health care
Within the United States, all businesses that keep financial records must adhere to GAAP or generally accepted accounting principles, including both for-profit and not-for-profit healthcare entities. "GAAP is not a single accounting rule, but rather the aggregate of many rules on how to account for various transactions" (Kramer & Applebaum 2013). The first two principles of GAAP are that "financial records must be separately maintained for each economic entity" in a separate fashion and that "an economic entity's accounting records include only quantifiable transactions. Certain economic events that affect a company, such as hiring a new chief executive officer or introducing a new product, cannot be easily quantified in monetary units and, therefore, do not appear in the company's accounting records" (GAAP, 2013, Houghton Mifflin Harcourt). These details may be included as qualitative data and, in fact,…...
mlaReferences
GAAP. (2013). Houghton Mifflin Harcourt. Retrieved:
Kramer, J & Applebaum, S. (2013). Accounts receivable from third-party payors: A GAAP
refresher. South Florida Hospital News. Retrieved from:
Budgets & Financial Plans
Provide the 10 main accounting principles and guidelines and describe each.
The ten accounting principles are described on the Accounting Coach website and are as follows:
Economic Entity Assumption -- This is the idea that a sole proprietor will keep personal and business transaction data and funds separate (Accounting Coach, 2015).
Monetary Unit Assumption -- This is the idea that all transactions recorded will be in U.S. dollars and that only transactions that CAN be reported as such will be done (Accounting Coach, 2015).
Time Period Assumption -- This is the principle that says that economic data will be defined based on specific time horizons such as a number of weeks, months, quarters and/or years (Accounting Coach, 2015).
Cost Principle -- This is the idea that there is a cash or cash equivalent that can and should be assigned to a given activity. For example, a person earning $8 an hour would…...
mlaReferences
Accounting Coach. (2015). Accounting Principles -- Explanation -- Accounting Coach. AccountingCoach.com. Retrieved 26 October 2015, from http://www.accountingcoach.com/accounting-principles/explanation
Brown, K. (2015). Arthur Andersen's Fall From Grace Is a Sad Tale of Greed and Miscues. WSJ. Retrieved 26 October 2015, from http://www.wsj.com/articles/SB1023409436545200
Business Dictionary. (2015). What is financial audit? Definition & meaning. BusinessDictionary.com. Retrieved 26 October 2015, from http://www.businessdictionary.com/definition/financial-audit.html
GASB
Persons who use governmental financial reports have different needs than those who use business financial reports. These different needs are shown in the way the framework of the accounting and reporting standards are set up. The GASB framework is geared towards being user-friendly to citizens and their elected representatives in government. These users are not the primary readers and/or targets of business reports. Thus, while some businesses might use mark-to-market accounting principles, like those employed by Enron prior to its collapse in the early days of the 21st century, GASB puts accountability and transparency at the top of its principles. The purpose of its accounting, in other words, is to show constituents what their government is doing with taxpayer dollars (eck, 2015).
One significant example of how GASB standards address differences between governmental and business financial reporting is the Congressional Budget Office, which shows the use of fund accounting and budgetary…...
mlaReferences
BubbaLouis. (2006). 9/10/2001: Rumsfeld says $2.3 TRILLION Missing from Pentagon. YouTube. Retrieved from https://www.youtube.com/watch?v=xU4GdHLUHwU
National Association of State Retirement Aministrators. (2013). NASRA. Retrieved
from http://www.nasra.org/files/Topical%20Reports/GASB/gasbdifferent.pdf
Reck, J. (2015). Accounting for Governmental and Nonprofit Entities. NY:
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 statements are produced and presented in a consistent manner. The International Financial eporting Standards (IFS) are the international equivalent of GAAP. While several countries utilize a national version of GAAP (U.S., Canada, UK, etc.), more than 100 countries use IFS, making this set of standards the most widely-adopted in the world. There is a move to converge national GAAP standards with IFS, including a multi-year project to converge U.S. GAAP with IFS. For now, however, IFS represents a different set…...
mlaReferences:
No author. (2012). Generally accepted accounting principles (GAAP). Investopedia. Retrieved August 18, 2012 from http://www.investopedia.com/terms/g/gaap.asp#axzz23vrKSd9Q
PCAOB.org (2012) PCAOB oversees: The auditors of companies to protect investors. Public Company Accounting Oversight Board. Retrieved August 18, 2012 from http://pcaobus.org/Pages/default.aspx
SEC.gov. (2012). The investor's advocate. Securities Exchange Commission. Retrieved August 18, 2012 http://www.sec.gov/about/whatwedo.shtml
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 financial statements (Investopedia, 2012). ith companies having to produce their statements according to a common set of criteria, the information is easier to compare not only between different years at the same company, but also against other firms in the industry and all other publicly-traded firms.
The IFRS is essentially the international version of GAAP. Financial statements in many countries, especially those in Europe, are produced according to IFRS. There are a many areas where GAAP and IFRS diverge, so analysts…...
mlaWorks Cited:
AICPA. (2011). International financial reporting standards (IFRS): An AICPA backgrounder. AICPA. Retrieved March 22, 2012 from http://www.ifrs.com/pdf/IFRSUpdate_V8.pdf
Beiersdorf 2011 Annual Report. Retrieved March 22, 2012 from http://www.beiersdorf.com/GetFile.ashx?id=3243
Investopedia (2012). Generally Accepted Accounting Principles (GAAP). Investopedia. Retrieved March 22, 2012 from http://www.investopedia.com/terms/g/gaap.asp#axzz1pmKm2c8C
Revlon Fiscal Year 2011 Form 10-K. Retrieved March 22, 2012 from http://services.corporate-ir.net/SEC/Document.Service?id=P3VybD1odHRwOi8vaXIuaW50Lndlc3RsYXdidXNpbmVzcy5jb20vZG9jdW1lbnQvdjEvMDAwMTE5MzEyNS0xMi0wNjUzMTAvZG9jL1JldmxvbkluYy5wZGYmdHlwZT0yJmZuPVJldmxvbkluYy5wZGY=
Accounting
This discussion contains research pertaining to the impact of cash-basis accounting on the distortion of the financial position and operating results of a business.
We began our discussion with a definition of cash base analysis. We concluded that this accounting tactic is used to examine cash and cash equivalents. This is done by separating cash flow transaction into one of three activities which include; operating, financing and investing activities.
Our investigation then explored why and how financial statements completed using cash-basis accounting can be distorted to present a misleading picture about the financial position and operating results of a company. Our investigation found that these distortions exist when accountants fail to provide a report of additional information that may not appear on the face of the financial statement. Additionally, we found that inconsistencies in the presentation of a financial statement can greatly influence the distortion of information that is found in the…...
mlaReference List
Financial Reporting under the Cash Basis of Accounting (2000) Standards Report International Federation of Accountants.
Live on the Lakeshore Financial Statements. (2003) Retrieved August 19, 2003 at http://aliveonthelakeshore.gospelcom.net/aotlfinancial03.pdf.
Navani, Vinay S. (2002) IRS eases cash-accounting rules for small businesses
Journal of Accountancy, Vol. 193
Yet, financial statements and managerial accounting reports can be highly effective nonetheless. Sometimes they will merely confirm what the proprietor already knows, but there are inevitably going to be times when they will reveal that the proprietor's assumptions about the nature of the business are false. Moreover, accounting can act as essentially a second opinion. The proprietor may feel one thing is true, but the numbers can reveal something different.
Overall, accounting is an essential component of any business. Sole proprietorships often make less use of accounting, in part because the law does not obligate them to engage in any more than the most rudimentary accounting. However, proprietors should not overlook the value of accounting. Accounting helps to reveal the business' past performance, but can also be used to enact organizational controls today and to help plant for more effective operations in the future. By understanding the firm's cost structure…...
mlaWorks Cited
Marshall, David H.; McManus, Wayne W & Viele, Daniel F. (2008). Accounting - What the Numbers Mean. McGraw-Hill/Irwin, New York, 2008.
By re-characterizing the epo 105 dealing as a sale, Lehman detached the account from its balance sheet (Durden, 2010).
Lehman frequently augmented its utilization of epo 105 transactions in the time previous to reporting interludes to decrease its openly reported net leverage and balance sheet. Lehman's intermittent reports did not reveal the money borrowing from the epo 105 transaction, even though Lehman had in reality borrowed tens of billions of dollars in these dealings, Lehman did not reveal the acknowledged responsibility to pay back the liabilities. Lehman utilized the money from the epo 105 dealings to pay off other dangers, thus dropping both the entire debts and the entire assets accounted for on its balance sheet and decreasing its power percentages. Therefore, Lehman's epo 105 dealing was made up of a two-fold procedure: performing epo 105 dealings followed by the utilization of epo 105 cash borrowings to pay down debts,…...
mlaReferences
Durden, Tyler. (2010). The "Repo 105" Scam: How Lehman Fooled Everyone (Including
Allegedly Dick Fuld) and How Other Banks Are Likely Doing This Right Now. Retreived
April 10, 2011, from Web site: http://www.zerohedge.com/article/repo-105-scam-how-lehman-fooled-everyone-including-allegedly-dick-fuld-and-how-other-banks-a
Goldstein, Jacob. (2011). Repo 105: Lehman's 'Accounting Gimmick' Explained. Retreived April
Accounting Fundamentals for ealthcare Management
This paper examines governmental and nonprofit accounting and discusses how it differs from commercial accounting. In the accounting field, there may not always be a clear distinction between the three types of organizations. The dividing line between business and nonbusiness organizations may depend on the incidence and relative importance of the nonbusiness characteristics found in an entity. The funds of such organizations are usually earmarked for specific purposes and must be used in accordance with laws, regulations, or contractual requirements.
One distinction of nonbusiness organizations is that they generally have no single indicator of performance, such as profit or net income. FASB:CS-4 provides two performance indicators for financial reporting for nonbusiness organizations:
They provide information about the nature and relationship between inflows and outflows of resources.
They provide information about service efforts and accomplishments.
FASB: CS-4 also sets forth the distinctive features of the nonbusiness organization:
Nonbusiness organizations receive significant amounts…...
mlaHorowitz, K.J. (2006, February 26). State and Local Government Accounting Principles. Retrieved on Aril 15, 2011 from Mercer County Community College website: http://www.mccc.edu/~horowitk/documents/Chapter02D.pdf
Ruppel, W. (2010). Governmental Accounting Made Easy. Hoboken, New Jersey: John Wiley & Sons, Inc.
Siegel, J.G., & Shim, J.K. (2006). Barron's Accounting Handbook (4th ed.). Hauppage, New York: Barron's Educational Series.
Accounting, by its nature, requires a set of standards that are exactly the same industry-wide. If there were not established rules for determining revenues, profits, expenses, and other influences on a company's bottom line, there would be no way to evaluate a corporation's effectivity, production, or potential. A lack of established standards would also mean that no two companies could be honestly compared, since their accounting methods could be so significantly different that their financial statements showed vastly different accounting methods.
In light of these potential discrepancies in reporting methods, the bodies that govern accounting have established Generally Accepted Auditing Standards, or GAAS. Generally These principles are required to be applied in all accounting situations, and they are extensive enough so that almost every possible scenario has a standard response. Interest owed in Houston is reflected on a financial statement in the exact same way that interest owed in New York…...
Does Coca-Cola have the ability to influence CCE's debt levels?
The debt to equity ratio of Coca Cola is: .92 for 2009 and 1.33 for 2010. While CCE has a debt to equity ratio of: 1.51 for 2009 and 1.3 for 2010. Coca Cola does have the ability to influence the debt levels of CCE. The way that this can take place is to use Coca Cola's credit line to help the firm raise additional working capital in the public markets. This would cause the debt levels of CCE to increase. Another option is that Coca Cola can purchase CCE and assume a percentage of their debt. A good example of this can be seen with Coca Cola's acquisition of CCE North America. In exchange for increasing their ownership in this segment, there was also an agreement for Coca Cola to take on CCE North America's debt of $7.9 billion.…...
mlaReferences
2010 Annual Report. (2011). The Coca Cola Company. Retrieved from: http://www.thecoca-colacompany.com/investors/pdfs/form_10K_2010.pdf
Kothari, S. (2010). Implications for GAAP. Journal of Accounting and Economics, 2 (3), 246 -- 286.
"Management believes that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates actual results could differ from the original estimates, requiring adjustments to these balances in future periods."
ased on the data retrieved and the projections made, the accounting division will proceed to the development of the consolidated statements for all of GM subsidies and the overall group. There are 24 consolidated statements, as follows: Discounted Operations; Asset Impairment; Investment in Nonconsolidated Affiliates; Marketable Securities; Variable Interest Entities; Finance Receivables and Securitization; Inventories; Equipment on Operating Leases; Income Taxes; Property - Net; Goodwill and Intangible Assets; Other Assets; Accrued Expenses, Other Liabilities and Deferred Income Taxes; Long-Term Debt and Loans Payable; Pensions and Other Postretirement enefits; Commitments and Contingent Matters, Stockholders' Equity; Earnings per Share Attributable to Common Stocks; Derivative Financial Instruments and Risk Management; Fair Value of…...
mlaBibliography
1. 2007 General Motors Annual Report. Page 9. On the Internet at retrieved on February 15, 2009http://www.gm.com/corporate/investor_information/docs/fin_data/gm07ar/download/gm07ar_full.pdf.Last
2. General Motors Mission Statement, 2009, on the internet at Ast retrieved on February 16, 2009http://www.samples-help.org.uk/mission-statements/general-motors-mission-statement.html .
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Accounting Case Study
Legal Plan Services
What type of product is Legal Plan Services selling? Tangible or intangible? What type of benefits does the client receive for his membership?
The kind of products that Legal Plan Services is selling is legal representation for civil litigation. The way the company's approach works is to provide customers with access to some of the top law firms for purchasing a membership. The services are considered to be intangible because this is not something that can be physically held. The benefits that the client receives are the ability to consult with any one of the attorneys from affiliate firms for free. This involves select cases including: personal injury, tax, criminal and civil related issues. If the client goes beyond a certain amount of hours is when the membership will provide a 25% discount on the firm's hourly rate. ("Intangible")
What accounting concepts, objectives, and definitions should the…...
mlaReferences
"Generally Accepted Accounting Principles." CPA Needed, 2011. Web. 3 Feb. 2012.
"Intangible." The Free Dictionary, 2012. Web. 3 Feb. 2012
"Pro Forma." Investopedia, 2012. Web. 3 Feb. 2012
Briner, Russell. "Revenue Recognition." CPA Journal, 2001. Web. 3 Feb. 2012.
They then proceed to detail their selected sample (76 NYSE firms that reported at least three annual losses in period's 1980-1985 and that reduced cash dividends. They then implemented various conditions to test their hypothesis that it is the troubled firm's aim to retain preservation of their company, rather than to make a bonus, that causes them to select a certain accountancy plan.
In section 2, the authors describe their methods used in selecting a sampled population and their bias controls. There is a great deal of numerical data, and the material is dense particularly when they elaborate on the earnings and cash flow performance of the various firms. Each unit is broken up into subunits. Scholarly tables condensed with data that for instance report accrual levels and changes for the 76 firms support their written text and the Tables are alluded to in the text. Statistical analysis of these…...
mlaReferences
DeAngelo, H. DeAngelo, L. & Skinner, DJ (1992) Accountign choice in troubled companies. Jour. Of Account. & Econ. 17, 113-143
Elliot, Barry & Elliot, Jamie: Financial accounting and reporting, Prentice Hall, London 2004
Gray SJ (1988) Towards a Theory of Cultural Influence on the Development of Accounting Systems Internationally Abacus, pp.1-15
http://folders.nottingham.edu.cn/staff/zalzae1/ATP/articles/Gray.pdf
Accounting Theory: A Reflective Essay
Introduction
Accounting theory serves as the foundation for the principles and practices that guide financial reporting. It aims to establish a common framework for understanding and interpreting accounting information. As a student of accounting, I have delved into various accounting theories, each offering unique insights and perspectives. This reflective essay explores my reflections on accounting theory, its significance, and its implications for the accounting profession.
The Role of Accounting Theory
Accounting theory provides a conceptual framework that underpins accounting practices. It establishes the principles and standards that govern the recording, classification, and reporting of financial information. By providing a....
Personal experiences and insights can be integrated into a reflective essay about accounting theory by discussing how these real-life experiences have shaped your understanding and interpretation of accounting concepts. Here are some ways you can incorporate personal experiences and insights into your essay:
1. Start by sharing a personal anecdote or story that highlights a specific accounting theory or concept that you have encountered in your professional or academic life. Reflect on how this experience has influenced your understanding of the theory and how it has shaped your perspective on accounting practices.
2. Reflect on any challenges or dilemmas you have faced....
Integrating Personal Experiences and Insights into an Accounting Theory Reflective Essay
Introduction
Accounting theory, as an abstract and technical discipline, often presents concepts that students and practitioners may find challenging to relate to their personal experiences. However, by integrating personal reflections into an accounting theory essay, one can enhance their understanding and demonstrate the relevance and applicability of these theories in real-world contexts.
Leveraging Personal Anecdotes and Examples
Illustrate Concepts: Use personal experiences as anecdotes to illustrate accounting principles and theories. For instance, a story about an investment decision can explain the concept of time value of money.
Provide Concrete Evidence: Insert specific....
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