Week 2 Case 1 4 Essay

Submitted By joaquin07
Words: 459
Pages: 2

Case 1-4 Generally Accepted Accounting Principles in Ch. 1
a. Accounting principles are the guidelines, rules, procedures, and standards followed by accountants and auditors to write, present, and verify business financial statements. Accounting principles have now become for the most part a uniform set of rules and regulations to identify, measure, record, and communicate a business entity’s financial information to internal users (board of directors, management), as well as external users (investors, shareholders, creditors, etc.,). The information offered and reported in financial reports helps all users to better learn and understand a business current economic state, and to also try to determine and forecast its economic future. In order for accounting principles to work for all users, both internal and external, the accounting principles have to include information that is relevant, reliable, and comparable.

b. In the United States, accounting principles generally accepted are the ones included in GAAP (generally Accepted Accounting Principles) implemented by the SEC (Securities and Exchange Commission). The FASB (Financial Accounting Standards Board) is the board in charge of creating, adopting, and implementing these accounting principles. As a source to determine whether accounting principles are substantiated by an authoritative board, or government agency, the FASB offers its Accounting Standards Codification for all publicly traded companies’ financial reporting, interim and/or annual effective September 15, 2009. Some of the basic accounting concepts included in GAAP are; the matching principle, business entity, going concern, periodicity, conservatism, consistency, cost, materiality, cost, objectivity, and full disclosure.

c. Although, the president might be correct, and there always maybe be diversity in accounting practices, but with globalization, a set of commonly used accounting principles might become the norm in the future. As an example