MATH 1022 Chapter : 6.1 Pg 5
Document Summary
Financial statements and financial reporting: essential characteristics of accounting, 1. Statement of stockholders equity: financial reporting, other than formal financial statements, presidents letter, supplementary schedules, prospectuses, new releases, social or environmental impact statement. Accounting and capital allocation: resources are limited, accountants must measure performance accurately and fairly on a timely basis, relevance and reliability. *process of capital allocation on scratch: effective capital allocation is critical to a healthy economy, promotes productivity, encourages innovation, provides an efficient liquid market for buying and selling securities, all the above. Need to develop standards: various users need financial information, gaap, authoritative accounting rule making body has established principle or given practice is accepted because universal. Parties involved in gaap in united states: 1. Aicpa: national professional organization of practicing cpas, problem by problem failed so aicpa created apb, 3. Advance written expression of accounting principles: 2.
