Generally Accepted Accounting Principles

generally veritable write up Principles (United States) In the U. S. , generally accepted throwaway linguistic rules, comm precisely abbreviated as US GAAP or simply GAAP, ar bill rules apply to prep be, stick, and deal fiscal commonwealthments for a wide variety of entities, including publicly-traded and privately-held companies, non-profit organizations, and governing bodys. Generally GAAP includes local applicable explanation Framework, related report law, rules and chronicle standardised.Similar to many other countries practicing under the common law system, the United States organization does non directly brand bill standards, in the belief that the private sector has better companionship and resources. US GAAP is not indite in law, although the U. S. Securities and Exchange accusation ( siemens) requires that it be followed in financial explanationing by publicly-traded companies. Cur subscribe toly, the pecuniary history Standards bill (FASB) is t he highest authority in establishing generally accepted accounting principles for public and private companies, as well as non-profit entities.For local and state governments, GAAP is determined by the Governmental Accounting Standards Board (GASB), which operates under a counter respite of laying claims, principles, and constraints, dissentent from those of standard private-sector GAAP. fiscal account in federal government entities is regulated by the Federal Accounting Standards Advisory Board (FASAB). The US GAAP provisions differ somewhat from multinational pecuniary Reporting Standards (IFRS), though former SEC Chairman Chris Cox set appear a agetable for all U. S. ompanies to drop GAAP by 2016, with the largest companies teddy to IFRS as early as 2009 Basic objectives pecuniary report should provide study that is useful to present to potential difference investors and creditors and other users in making rational investment, credit, and other financial decisions. he lpful to present to potential investors and creditors and other users in assessing the amounts, timing, and doubt of prospective capital receipts. about economic resources, the claims to those resources, and the changes in them. edit Basic conceptsTo come across elemental objectives and implement central qualities GAAP has four basic assumptions, four basic principles, and four basic constraints. edit Assumptions Accounting Entity assumes that the business is screen from its owners or other businesses. Revenue and expense should be kept set forth from personal expenses. Going bushel assumes that the business go forth be in operation indefinitely. This validates the methods of asset capitalization, depreciation, and amortization. notwithstanding when liquidation is certain this assumption is not applicable. M wizardtary Unit principle assumes a stable silver is going to be the social building block of record.The FASB accepts the nominal value of the US Dollar as the mone tary unit of record unadjusted for inflation. The Time-period principle implies that the economic activities of an enterprise can be divided into artificial time periods. edit Principles Cost principle requires companies to account and report based on acquisition cost rather than plum marketplace value for or so assets and liabilities. This principle provides information that is reliable (removing opportunity to provide subjective and potentially biased market values), scarce not very relevant.Thus there is a trend to use circus values. Most debts and securities are instantly reported at market values. Revenue principle requires companies to record when receipts is (1) realized or realizable and (2) earned, not when hard currency is received. This way of accounting is called accrual basis accounting. matching principle. Expenses hit to be matched with gross enhancements as long as it is reasonable to do so. Expenses are recognized not when the work is performed, or when a product is produced, but when the work or the product actually makes its constituent to revenue.Only if no connection with revenue can be established, cost may be charged as expenses to the cur riptide period (e. g. military post salaries and other administrative expenses). This principle allows greater evaluation of actual favorableness and performance (shows how much was washed-out to earn revenue). Depreciation and Cost of Goods Sold are good examples of coat of this principle. Disclosure principle. Amount and kinds of information disclosed should be decided based on trade-off compend as a large amount of information cost more to prepare and use.Information disclosed should be enough to make a judgment while keeping cost reasonable. Information is presented in the of import body of financial statements, in the notes or as supplementary information edit Constraints Objectivity principle the caller-up financial statements provided by the accountants should be based on o bjective evidence. Materiality principle the significance of an circumstance should be considered when it is reported. An item is considered meaningful when it would affect the decision of a reasonable individual. Consistency principle It room that the confederation uses the same accounting principles and methods from year to year. Prudence principle when choosing between two solutions, the one that will be least in all likelihood to overstate assets and income should be picked (see convention of conservatism). Generally Accepted Accounting Principles (UK) The Generally Accepted Accounting make out in the UK, or UK GAAP, are the overall body of regulation establishing how family accounts essential be watchful in the United Kingdom. This includes not only accounting standards, but in like manner UK caller-up law.What is referred to elsewhere as Generally Accepted Accounting Principles is in the UK referred to as Generally Accepted Accounting Practice. edit History Accounti ng standards derive from a number of sources. The chief standard-setter is the Accounting Standards Board (ASB), which issues standards called Financial Reporting Standards (FRS). The ASB is part of the Financial Reporting Council, an independent regulator funded by a levy on listed companies1, and it replaced the Accounting Standards Committee (ASC), which was disbanded in 1990 following a number of criticisms of its work.To the extent that the ASCs pronouncements, known as Statements of Standard Accounting Practice (SSAPs), restrain not been replaced by FRS, they remain in force. edit Creation/Revision of Standards The ASB has a formal exposure serve well for proposed standards. Early concepts are issued as Discussion Papers. These are released to the public and comments invited. Where a new standard is to be proposed, a Financial Reporting Exposure Draft (FRED) is released for comment. The standard in final form is only issued when comments charter been incorporated or address ed.This aims to address the criticisms levelled at the ASC, whose comment bear on was little rigorous. Issues that require an speedy solution are considered by the Urgent Issues Task Force (UITF). The UITF comprises a number of senior figures from fabrication and accounting firms. It meets as necessary to consider pressing issues and issues Abstracts which become natural covering immediately. edit Legislation The principal principle governing describe in the UK is laid down in the Companies lay out 2006, which incorporates the requirements of European law.The Companies Act sets out certain minimum reportage requirements for companies and, for example, requires limited companies to file their accounts with the Registrar of Companies who makes them functional to the general public. From 2005, this framework changed as a result of European law requiring that all listed European companies report under International Financial Reporting Standards (IFRSs). In the UK, companies whi ch are not listed have the option to report either under IFRSs or under UK GAAP2.Recently issued UK FRSs have, in any case replicated the wording of corresponding IFRSs, reducing the differences between the two sets of standards significantly. china Accounting Standards From Wikipedia, the free encyclopedia (Redirected from Chinese Accounting Standards) Jump to navigation, expect Chinese accounting standards are the accounting rules used in Chinese state owned corporations in mainland China. They are currently macrocosm phased out in favour of Generally Accepted Accounting Principles or International Accounting Standards.As of February 2010, the Chinese Accounting Standard Systems is composed of Basic Standard, 38 specific standards and application program Guidance. Chinese accounting standards are unique because they originated in a socialist period in which the state was the sole owner of industry. and then unlike Western accounting standards, they are less a mother fucker of profit and loss and an stock of assets available to a company. In contrast to a Western equilibrate sheet, Chinese accounting standards do not include an accounting of the debts that a corporation holds, and are less suitable for management work than for accounting for tax purposes.This system of accounting is widely considered to be unfit for managing corporations in a market economy. As a result, Chinese corporations are gradually moving toward International Financial Reporting Standards. This has prove to be a massive undertaking. As a consequence Chinese companies who offer shares for sale in the United States used to be required to prepare three sets of statements, one using Chinese accounting standards (China GAAP), one using international standards (IFRS), and one using North American GAAP standards (US GAAP).However, since 2008 the U. S. Securities and Exchange Commission (SEC) allows foreign private issuers to use financial statements prepared in accord with IFRS. 1 However, in recent years, The finance Department of Chinese Government has issued new Chinese Accounting Standards which foregather into IFRS and the similarity is almost 90-95%. The description cost has been reduced greatly because of this measureGenerally Accepted Accounting PrinciplesGenerally Accepted Accounting Principles (United States) In the U. S. , generally accepted accounting principles, commonly abbreviated as US GAAP or simply GAAP, are accounting rules used to prepare, present, and report financial statements for a wide variety of entities, including publicly-traded and privately-held companies, non-profit organizations, and governments. Generally GAAP includes local applicable Accounting Framework, related accounting law, rules and Accounting Standard.Similar to many other countries practicing under the common law system, the United States government does not directly set accounting standards, in the belief that the private sector has better knowledge and resource s. US GAAP is not create verbally in law, although the U. S. Securities and Exchange Commission (SEC) requires that it be followed in financial reporting by publicly-traded companies. Currently, the Financial Accounting Standards Board (FASB) is the highest authority in establishing generally accepted accounting principles for public and private companies, as well as non-profit entities.For local and state governments, GAAP is determined by the Governmental Accounting Standards Board (GASB), which operates under a set of assumptions, principles, and constraints, diametrical from those of standard private-sector GAAP. Financial reporting in federal government entities is regulated by the Federal Accounting Standards Advisory Board (FASAB). The US GAAP provisions differ somewhat from International Financial Reporting Standards (IFRS), though former SEC Chairman Chris Cox set out a timetable for all U. S. ompanies to drop GAAP by 2016, with the largest companies switching to IFRS as early as 2009 Basic objectives Financial reporting should provide information that is useful to present to potential investors and creditors and other users in making rational investment, credit, and other financial decisions. helpful to present to potential investors and creditors and other users in assessing the amounts, timing, and uncertainty of prospective coin receipts. about economic resources, the claims to those resources, and the changes in them. edit Basic conceptsTo achieve basic objectives and implement fundamental qualities GAAP has four basic assumptions, four basic principles, and four basic constraints. edit Assumptions Accounting Entity assumes that the business is separate from its owners or other businesses. Revenue and expense should be kept separate from personal expenses. Going Concern assumes that the business will be in operation indefinitely. This validates the methods of asset capitalization, depreciation, and amortization. Only when liquidation is certai n this assumption is not applicable. Monetary Unit principle assumes a stable currency is going to be the unit of record.The FASB accepts the nominal value of the US Dollar as the monetary unit of record unadjusted for inflation. The Time-period principle implies that the economic activities of an enterprise can be divided into artificial time periods. edit Principles Cost principle requires companies to account and report based on acquisition cost rather than fair market value for most assets and liabilities. This principle provides information that is reliable (removing opportunity to provide subjective and potentially biased market values), but not very relevant.Thus there is a trend to use fair values. Most debts and securities are now reported at market values. Revenue principle requires companies to record when revenue is (1) realized or realizable and (2) earned, not when exchange is received. This way of accounting is called accrual basis accounting. Matching principle. Exp enses have to be matched with revenues as long as it is reasonable to do so. Expenses are recognized not when the work is performed, or when a product is produced, but when the work or the product actually makes its contribution to revenue.Only if no connection with revenue can be established, cost may be charged as expenses to the current period (e. g. office salaries and other administrative expenses). This principle allows greater evaluation of actual profitability and performance (shows how much was spent to earn revenue). Depreciation and Cost of Goods Sold are good examples of application of this principle. Disclosure principle. Amount and kinds of information disclosed should be decided based on trade-off analysis as a larger amount of information costs more to prepare and use.Information disclosed should be enough to make a judgment while keeping costs reasonable. Information is presented in the main body of financial statements, in the notes or as supplementary information edit Constraints Objectivity principle the company financial statements provided by the accountants should be based on objective evidence. Materiality principle the significance of an item should be considered when it is reported. An item is considered significant when it would affect the decision of a reasonable individual. Consistency principle It actor that the company uses the same accounting principles and methods from year to year. Prudence principle when choosing between two solutions, the one that will be least likely to overstate assets and income should be picked (see convention of conservatism). Generally Accepted Accounting Principles (UK) The Generally Accepted Accounting Practice in the UK, or UK GAAP, are the overall body of regulation establishing how company accounts moldiness be prepared in the United Kingdom. This includes not only accounting standards, but also UK company law.What is referred to elsewhere as Generally Accepted Accounting Principles is in the UK referred to as Generally Accepted Accounting Practice. edit History Accounting standards derive from a number of sources. The chief standard-setter is the Accounting Standards Board (ASB), which issues standards called Financial Reporting Standards (FRS). The ASB is part of the Financial Reporting Council, an independent regulator funded by a levy on listed companies1, and it replaced the Accounting Standards Committee (ASC), which was disbanded in 1990 following a number of criticisms of its work.To the extent that the ASCs pronouncements, known as Statements of Standard Accounting Practice (SSAPs), have not been replaced by FRS, they remain in force. edit Creation/Revision of Standards The ASB has a formal exposure process for proposed standards. Early concepts are issued as Discussion Papers. These are released to the public and comments invited. Where a new standard is to be proposed, a Financial Reporting Exposure Draft (FRED) is released for comment. The standard in final form is only issued when comments have been incorporated or addressed.This aims to address the criticisms levelled at the ASC, whose comment process was less rigorous. Issues that require an immediate solution are considered by the Urgent Issues Task Force (UITF). The UITF comprises a number of senior figures from industry and accounting firms. It meets as necessary to consider pressing issues and issues Abstracts which become binding immediately. edit Legislation The principal legislation governing reporting in the UK is laid down in the Companies Act 2006, which incorporates the requirements of European law.The Companies Act sets out certain minimum reporting requirements for companies and, for example, requires limited companies to file their accounts with the Registrar of Companies who makes them available to the general public. From 2005, this framework changed as a result of European law requiring that all listed European companies report under International Financial Reporting St andards (IFRSs). In the UK, companies which are not listed have the option to report either under IFRSs or under UK GAAP2.Recently issued UK FRSs have, in any case replicated the wording of corresponding IFRSs, reducing the differences between the two sets of standards significantly. China Accounting Standards From Wikipedia, the free encyclopedia (Redirected from Chinese Accounting Standards) Jump to navigation, search Chinese accounting standards are the accounting rules used in Chinese state owned corporations in mainland China. They are currently being phased out in favour of Generally Accepted Accounting Principles or International Accounting Standards.As of February 2010, the Chinese Accounting Standard Systems is composed of Basic Standard, 38 specific standards and Application Guidance. Chinese accounting standards are unique because they originated in a socialist period in which the state was the sole owner of industry. Therefore unlike Western accounting standards, they ar e less a tool of profit and loss and an inventory of assets available to a company. In contrast to a Western brace sheet, Chinese accounting standards do not include an accounting of the debts that a corporation holds, and are less suitable for management control than for accounting for tax purposes.This system of accounting is widely considered to be unsuitable for managing corporations in a market economy. As a result, Chinese corporations are gradually moving toward International Financial Reporting Standards. This has proven to be a massive undertaking. As a consequence Chinese companies who offer shares for sale in the United States used to be required to prepare three sets of statements, one using Chinese accounting standards (China GAAP), one using international standards (IFRS), and one using North American GAAP standards (US GAAP).However, since 2008 the U. S. Securities and Exchange Commission (SEC) allows foreign private issuers to use financial statements prepared in ac cordance with IFRS. 1 However, in recent years, The Finance Department of Chinese Government has issued new Chinese Accounting Standards which converge into IFRS and the similarity is almost 90-95%. The translation cost has been reduced greatly because of this measureGenerally Accepted Accounting PrinciplesA corporation must use the same depreciation method for tax and financial reporting purposes. Must use diametrical depreciation methods for tax and financial reporting may use different depreciation methods for tax and financial reporting must use different (than for tax purposes), but strictly mandated, depreciation methods for financial reporting purposes. 1 points Question 2 1 . Allocation of the historic costs of fixed assets against the annual revenue they generate is called net profits. Gross profits. Depreciation. Amortization. 1 points Question 3 1 .Given the financial managers preference for hot receipt of capital flows, a longer depreciable life is preferable to a sh orter one. A shorter depreciable life is favorite(a) to a longer one. The manager is not have-to doe with with depreciable lives, because depreciation is a non- bills expense. The manager is not touch on with depreciable lives, because once purchased, depreciation is considered a sunk cost. 1 points Question 4 1 . The Modified accelerate Cost Recovery System (MACROS) is a depreciation method used for tax financial reporting managerial cost accounting Question 5 .The depreciable life of an asset is of concern to the financial manager. In general, a longer depreciable life is preferred, because it will result in a fast receipt Of money flows. A shorter depreciable life is preferred, because it will result in a faster receipt of immediate payment flows. A shorter depreciable life is preferred, because management can then purchase new assets, as the old assets are written off. A longer depreciable life is preferred, because management can postpone purchasing new assets, since the Old assets mum have a useful life. 1 points Question 6 1 . A corporation exchange a fixed asset for $100,000.This is an investment coin flow and a source of funds. An operating bills flow and a source of funds. An operating cash flow and a use of funds. An investment cash flow and a use of funds. Question 7 1 . A corporation raises $500,000 in semipermanent debt to acquire additional plant capacity. This is considered an investment cash flow. A funding cash flow. A financing cash flow and investment cash flow, respectively. A financing cash flow and operating cash flow, respectively. 1 points Question 8 1 . A firms operating cash flow (SCOFF) is defined as Ross profit minus operating expenses.Generally Accepted Accounting PrinciplesIntroduction The purpose of this report is to disclose the items that may result in adjusting entries for both prepayments and accrual by looking at the trial balance and Income statement. Furthermore, analyzing the historical summary of financial Is to know the trend for profit or loss of the company assets.Fundamental foremost of all, why we have to make BAD? Balance day adjustments are therefore required to keep in line the financial statements portray a correct picture on the firms financial performance and financial position. We have to recognize all transaction occurring in that accounting period, irrespective of whether cash has been received or paid. The supreme objective of adjusting entries Is to delay that the revenues (income) earned In the accounting period are matched by all costs Incurred for that name accounting period (Monish College, 2011).Prepayment There are two types of adjusting entries, prepayments and accruals. Prepayment is a payment in jump on of the period to which it pertains. What this mean is, this category of adjustments aligns recorded revenues (income) and costs with appropriate accounting periods. For example, there are situations where cash Is received before goods and function are pro vided to customers or situations where cash has been paid In climb on for costs of operation and which relate to future counting periods.Prepayments divided into two sections, which are prepaid expenses and unearned revenue. prepaid expenses is type of assets that shown on a balance sheet as a result of business payments for goods and function to be received in the near future. While prepaid expenses are initially recorded as assets, their value Is expensed over time as the benefit Is receive something of value in the near future. Prepayments a lot occur In regard to Insurance, supplies, advertising, and rent. Earned revenue is also known as prepaid revenue. It bureau payment, which is received in advance of providing a good or service. Since an obligation exists on the part of the company to provide goods or services for which the advance payment was received, unearned revenue is a liability. An example is a retainer received by an attorney. When the services are performed, rev enue is the earned. Another examples are pre-booked airline ticket, rent received In advance and magazine subscriptionGenerally Accepted Accounting PrinciplesA corporation must use the same depreciation method for tax and financial reporting purposes. Must use different depreciation methods for tax and financial reporting may use different depreciation methods for tax and financial reporting must use different (than for tax purposes), but strictly mandated, depreciation methods for financial reporting purposes. 1 points Question 2 1 . Allocation of the historic costs of fixed assets against the annual revenue they generate is called net profits. Gross profits. Depreciation. Amortization. 1 points Question 3 1 .Given the financial managers preference for faster receipt of cash flows, a longer depreciable life is preferred to a shorter one. A shorter depreciable life is preferred to a longer one. The manager is not concerned with depreciable lives, because depreciation is a non-cash e xpense. The manager is not concerned with depreciable lives, because once purchased, depreciation is considered a sunk cost. 1 points Question 4 1 . The Modified intensify Cost Recovery System (MACROS) is a depreciation method used for tax financial reporting managerial cost accounting Question 5 .The depreciable life of an asset is of concern to the financial manager. In general, a longer depreciable life is preferred, because it will result in a faster receipt Of cash flows. A shorter depreciable life is preferred, because it will result in a faster receipt of cash flows. A shorter depreciable life is preferred, because management can then purchase new assets, as the old assets are written off. A longer depreciable life is preferred, because management can postpone purchasing new assets, since the Old assets still have a useful life. 1 points Question 6 1 . A corporation sell a fixed asset for $100,000.This is an investment cash flow and a source of funds. An operating cash flow and a source of funds. An operating cash flow and a use of funds. An investment cash flow and a use of funds. Question 7 1 . A corporation raises $500,000 in long-term debt to acquire additional plant capacity. This is considered an investment cash flow. A financing cash flow. A financing cash flow and investment cash flow, respectively. A financing cash flow and operating cash flow, respectively. 1 points Question 8 1 . A firms operating cash flow (SCOFF) is defined as Ross profit minus operating expenses.Generally Accepted Accounting PrinciplesIntroduction The purpose of this report is to come across the items that may result in adjusting entries for both prepayments and accrual by looking at the trial balance and Income statement. Furthermore, analyzing the historical summary of financial Is to know the trend for profit or loss of the company assets.Fundamental set-back of all, why we have to make BAD? Balance day adjustments are therefore required to ensure the financial stat ements portray a correct picture on the firms financial performance and financial position. We have to recognize all transaction occurring in that accounting period, irrespective of whether cash has been received or paid. The last-ditch objective of adjusting entries Is to ensure that the revenues (income) earned In the accounting period are matched by all costs Incurred for that name accounting period (Monish College, 2011).Prepayment There are two types of adjusting entries, prepayments and accruals. Prepayment is a payment in advance of the period to which it pertains. What this mean is, this category of adjustments aligns recorded revenues (income) and costs with appropriate accounting periods. For example, there are situations where cash Is received before goods and services are provided to customers or situations where cash has been paid In advance for costs of operation and which relate to future counting periods.Prepayments divided into two sections, which are prepaid expen ses and unearned revenue. prepay expenses is type of assets that shown on a balance sheet as a result of business payments for goods and services to be received in the near future. While prepaid expenses are initially recorded as assets, their value Is expensed over time as the benefit Is receive something of value in the near future. Prepayments oft occur In regard to Insurance, supplies, advertising, and rent. Earned revenue is also known as prepaid revenue. It means payment, which is received in advance of providing a good or service. Since an obligation exists on the part of the company to provide goods or services for which the advance payment was received, unearned revenue is a liability. An example is a retainer received by an attorney. When the services are performed, revenue is the earned. Another examples are pre-booked airline ticket, rent received In advance and magazine subscription