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Introduction to accounting standard
International financial accounting standard committee foundation. I
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Accounting for financial instruments and the issues that go along with it have been an ongoing issue throughout the years for businesses. As a result the Financial Accounting Standards Board have handed down decisions regarding the valuation method that should be used. Whether these decisions are truly the best way to value financial instruments has been up for debate. The earliest decision came down in May of 1993 when the Financial Accounting Standards Board passed Statement of Financial Accounting Standards No. 115. According to the Financial Accounting Standards Board this statement addresses the accounting and reporting for investments in equity securities that have readily determinable fair values and for all investments in debt securities. These investments are classified in one of three different categories. (Financial Accounting Standards Board [FASB], n.d.) For debt securities that a company intends to hold until maturity are classified as “held to maturity” securities. For debt and equity securities that are purchased and then held for the purpose of them being sold in the...
The goal of the Codification is to simplify the organization of thousands of authoritative U.S. accounting pronouncements issued by multiple standard-setters. To achieve this goal, the FASB initiated a project to integrate and topically organize all relevant accounting pronouncements issued by the U.S. standard-setters including those of the FASB, the American Institute of Certified Public Accountants (AICPA), and the Emerging Issues Task Force (EITF)
To help accounting professionals easily navigate through 50-plus years of unorganized US generally accepted accounting principles (GAAP) and standards the Trustees of the Financial Accounting Foundation approved the Financial Accounting Standards Board (FASB) Accounting Standards Codification (Codification.) By codifying authoritative US GAAP, FASB will provide users with real-time and accurate information in one location. Concurrently, FASB developed the FASB Codification Research System; a web-based system allowing registered users to electronically research accounting issues. Since 2009, the codification became the single source of nongovernmental authoritative GAAP.
Since 1973, FASB has been the private sector organization designated to establish standards of financial accounting and reporting. Lending authority to its designation is the recognition of the SEC and the American Institute of Certified Publi...
Financial Accounting Standards Board. (1985). Statement of Financial Accounting Standards No. 86. Norwalk. Retrieved April 7, 2014, from http://www.fasb.org/cs/BlobServer?blobkey=id&blobnocache=true&blobwhere=1175820922177&blobheader=application%2Fpdf&blobheadername2=Content-Length&blobheadername1=Content-Disposition&blobheadervalue2=189998&blobheadervalue1=filename%3Dfas86.pdf&blobcol=url
GAAP reporting standards (AICPA, n.d.). A private business owner can utilize the concise and familiar accounting principles and accrual income tax or cash basis method of financial reporting to assess the company’s performance and provide relatable decision-making information to stakeholders (AICPA, n.d.). Moreover, it is a cost-effective measure for business owners that do not have to comply with U.S. GAAP base financial statements. In addition, CPAs can provide value pricing by preparing meaningful and concise reporting to internal and external parties. However, a business owner should carefully consider and examine the available options before deciding on an appropriate reporting framework. In order to provide the best short-term and long-term solution, it is imperative to consider a company’s business structure and future
Financial accounting is the process of reporting a variety of information from a specific entity with hope to aid internal and external parties about the financial position of the entity (Hoggett et al., 2006). The guidelines of these reports are heavily regulated by an array of corporations to provide a true and honest image of the entities financial position. There are a select group of main bodies that construct the framework for the Regulations of Financial Reporting with in Australia. To regulate financial reporting the Corporations Act was formed so that all accountants may conform to the standard. This act was created by the Commonwealth of Australia and focuses not only on companies but also investments and partnerships.
The IASC Board approved the IASB (International Accounting Standards Board) Framework ( in April, 1989) which was a successor of the IASC Board, and it accepted its Framework in April 2001 (Wells, 2011)[ Wells, M J. C., (2011). Framework-based Approach to Teaching Principle-based Accounting Standards., Accounting Education: an international journal., 20(4), 303-316.]. International standards are developed by IASB which are named International Financial Reporting Standards (IFRS). Although IASB took the place of IASC with its accounting standards, its IAS (International Accounting Standards) is enforced by IASB until now. The conceptual framework is helpful when it is used to develop the setting of International accounting standards. First of
According to the conceptual framework, the potential users of financial statements are investors, creditors, suppliers, employees, customers, governments and agencies, and the general public (Financial Accounting Standards Board, 2006). The primary users are investors, creditors, and those who advise them. It goes on to define the criteria that make up each potential user, as well as, the limitations of financial reporting. The FASB explicitly states that financial reporting is “but one source of information needed by those who make investment, credit, and similar resource allocation decisions. Users also need to consider pertinent information from other sources, and be aware of the characteristics and limitations of the information in them” (Financial Accounting Standards Board, 2006). With this in mind, it is still particularly difficult to determine whom the financials should be catered towards and what level of prudence is necessary for quality judgment.
Auditing standards are currently seen as incredibly important to the Auditing profession and the Financial Industry as a whole. However, these standards were not always in place. Auditing was previously self-regulated and lacked guidance. Due to the many accounting scandals, stock crash, and securities market reforms that occurred, auditing was reformed, providing stronger requirements and placing more responsibility on those in charge.
: Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. Retrieved on Feb 28, 2011 from: Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2008). Financial accounting (6th ed.). Hoboken, NJ: Wiley.
The globalization of business has resulted in the need for compatible accounting standards that can be used internationally for financial reporting. As a result, the International Financial Reporting Standards (IFRS) were developed by the International Accounting Standards Board (IASB) to unify the various financial reporting methods and create a single accounting standard which can be applied to any financial statement worldwide (Byatt). The global standardization of financial reporting will increase the readability and enhance comparability of globally traded companies’ financial statements, without the need of conversion or translation. There are a few main differences between the International Financial Reporting Standards (IFRS) and the U.S. Generally Accepted Accounting Principles (U.S GAAP). The increasing recognition and acceptance of the International Financial Reporting Standards by accounting professionals in the United States, will affect the way in which the U.S will record financial statements in the future.
The International Accounting Standards Board, (IASB), began life as the International Accounting Standards Committee (IASC) in the 1973. The IASC was created in June 1973 as a result of an agreement by the accountancy bodies of Australia, Canada, France, Germany, Japan, Mexico, the Netherlands, the United Kingdom and Ireland and the United States. These countries constituted the Board of IASC at that time.
GAAP is exceptionally useful because it attempts to regulate and normalize accounting definitions, assumptions, and methods. Because of generally accepted accounting principles one is able to presuppose that there is uniformity from year to year in the methods that are used to prepare a company's financial statements. And even though variations might exist, one can make realistically confident conclusions when comparing one company to another, or when comparing one company's financial statistics to the statistics for the industry as a whole. Over the years the generally accepted accounting principles have become more multifaceted because financial transactions have become more intricate (Accounting Principles, 2011).
The revenue/cost period-: Revenue and the cost period in accounting that the company get income from normal business activities. It’s referred to normal business income that the company got by selling their product and service.
The success of a company is very dependent upon its financial accounting. In accounting there are numerous Regulatory bodies that govern the accounting world. These companies are extremely important to a company because they set the standards when it comes to the language and decision making of a company. These regulatory bodies can be structured as agencies, associations, commissions, and boards. Without companies like the Security and Exchange Commission (SEC), The Financial Accounting Standards Board (FASB), the Governmental Accounting Standards Board (GASB), Internal Accounting Standards Board (IASB), Internal Revenue Service (IRS), and other regulatory bodies a company could not make well informed decisions. In this paper the author will look at only four of them.