Saturday, 28 December 2019

Unit 3: Introduction to US-GAAP


Unit 3: Introduction to US-GAAP

Within the accounting profession, there have been challenges to develop a set of standards that are generally accepted and universally practiced.

Thus far, the main debate in setting accounting standards is “Whose rules should we play by, and what should they be?” While the answer is unclear, users of financial statements and reporting must find methods that has an universal objective, that allows “Grapes for Grapes” comparisons that clearly, fairly, and completely prepares a company financial statements.

For years GAAP has been the common set of standards and procedures for the U.S., the core for establishing a principle of reporting but now IFRS an international friendly financial reporting system has become popular for its use globally.

Securities and Exchange (SEC), established by the federal government to help create and regulate financial information presented to stockholders.

American Institute of Certified Public Accountants (AICPA), an organization of practicing Certified Public Accountants (CPA’s) established to contribute to the effort.

And the major operator Financial Accounting Standards Board (FASB), objective is to establish and improve standards of financial accounting and reporting for the guidance and education of the public, which includes issuers, auditors, and use of financial information.

Transpired by the London-based International Accounting Standards Boards (ISAB); for international purposes U.S GAAP or (IFRS) International Reporting Standards, also known as IGAAP are two rules accepted for financial reporting.

Requirements for IFRS.U.S.GAAP accounting for EPS is with more details on the computational guidance on calculations similar to IFRS accounting for EPS which is calculations of year to date that varies.

Accounting Entity: This assumes the business to be a separate entity from its owners as well as other businesses.

Moreover, it also stresses on keeping revenue and expense separate from personal expenses.

AICPA: American Institute of Certified Public Accountants.

FASB: Financial Accounting Standards Board.

GAAP: General Accepted Accounting Principles.

GASB: Governmental Accounting Standards Board.

Going Concern: This assumption presumes that the business will be indefinitely in operation.

This assumption authenticates the methods of amortization, depreciation, and asset capitalization.

However, this assumption is not applicable in the event of liquidation.

Monetary Unit Principle: This assumption presumes an unwavering currency to continue to be the unit of record.

Time-period Principle: This assumption states that a business enterprise's economic activities can be divided into simulated time periods.

US GAAP: The Generally Accepted Accounting Principles in the US (US GAAP) refer to the accounting rules used in United States to organize, present, and report financial statements for an assortment of entities which include privately held and publicly traded companies, nonprofit organizations, and governments.

US SEC: United States Securities and Exchange Commission.

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