Application & Awareness Application & Awareness - PowerPoint PPT Presentation

Application & Awareness Application & Awareness

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 Introduction of 3FOLD  Understanding of GAAP  Understanding of Financial Statement  Income and Expenses Recognition  Income Tax , Equity Measurement Income Tax , Equity Measurement  Assets & Liability Valuation and  Disclosures Requirements  GAAP Vs. IFRS

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intended to assist employers, employees, and others as they Statements. While we attempt to thoroughly address specific Statements specific everything everything necessary to ensure compliance. Thus, this this information addressing issues issues related to preparation of Financial Statement, Statement, rather extent that this information references practices or procedures are not required by a statute, regulation, or standard, standard, it cannot, obligations. regulators may may modify rules and interpretations in light of of new technology, keep apprised apprised of such developments, or to review information information

UNDERSTANDING OF GAAP Principles of GAAP Principles of GAAP Principles of GAAP Principles of GAAP WHY GAAP Regulating GAAP Regulating GAAP How to apply GAAP How to apply GAAP Why Should I Know GAAP Why Should I Know GAAP

rules used used to prepare and standardize the the reporting balance balance balance sheets, income statements and balance sheets, income statements and cash cash companies companies and many private companies in the United measured so that the information provided measured on financial making economic economic decisions about a company, such as GAAP is concerned with: the measurement of economic activity; the measurement of economic activity; the time when such measurements are to be made and recorded; the time when such measurements are to be made and recorded; the time when such measurements are to be made and recorded; the disclosures surrounding this activity; and the disclosures surrounding this activity; and the preparation and presentation of summarized economic information in the preparation and presentation of summarized economic information in the preparation and presentation of summarized economic information in the preparation and presentation of summarized economic information in the preparation and presentation of summarized economic information in the preparation and presentation of summarized economic information in

makes a company's company's financials comparable and and understandable and others and others others can make rational investment, others can make rational investment, investment, credit investment, credit useful and and helpful to users, GAAP requires requires information relevant, reliable, comparable and consistent. .

makes a company's company's financials comparable and and understandable and others and others others can make rational investment, others can make rational investment, investment, credit investment, credit useful and and helpful to users, GAAP requires requires information Comparable And

in 1973, , the FASB has issued over 100 formal formal FAS was formed, formed, its predecessor, the Accounting Accounting Principles between between 1959 and 1973. preceded by by the Committee on Accounting Procedure, Procedure, known as as Accounting Research Bulletins (ARBs) (ARBs) from opinions and and ARBs are still in force today.

that are fundamental fundamental to GAAP entity " that is entity " that is is separate from its owners. is separate from its owners. operations operations indefinitely. that can be "quantified" resources and obligation for which which an agreed of an enterprise enterprise can be divided into artificial time periods . and report report for both assets and liabilities active at their original original purchase, materiality generally generally refers to the relative importance of the various various financial measurement and value measurement and value value that are reported in the financial statements value that are reported in the financial statements statements of a business statements of a business always be be elements of complexity and an uncertainty, which which will have Judgment . is that it it allows information to be prepared with the exact exact same methods conservatism refers refers to the fact that many accountants have a bias towards towards and list the the economic substance of a transaction as opposed opposed to just accounting if accounting if if a business transaction generates revenue in a period if a business transaction generates revenue in a period period then period then should be reported in that same period.

entity, you should understand the principles of GAAP. entity, you should understand the principles of GAAP. , if you are simply preparing your individual income tax statements, , if you are simply preparing your individual income tax statements, , if you are simply preparing your individual income tax statements, understanding GAAP probably isn't as important to you understanding GAAP probably isn't as important to you. The FASB measures GAAP-based income so that the information provided is useful to based income so that the information provided is useful to based income so that the information provided is useful to those making economic decisions (i.e., investors and creditors). those making economic decisions (i.e., investors and creditors). those making economic decisions (i.e., investors and creditors). those making economic decisions (i.e., investors and creditors). those making economic decisions (i.e., investors and creditors). those making economic decisions (i.e., investors and creditors). IRS, on the other hand, uses income tax reporting to achieve social and economic IRS, on the other hand, uses income tax reporting to achieve social and economic IRS, on the other hand, uses income tax reporting to achieve social and economic objectives, such as reducing unemployment and encouraging investment in capital objectives, such as reducing unemployment and encouraging investment in capital objectives, such as reducing unemployment and encouraging investment in capital

UNDERSTANDING OF FINANCIAL STATEMENT UNDERSTANDING OF FINANCIAL STATEMENT UNDERSTANDING OF FINANCIAL STATEMENT Accounting Overview and Accounting Overview and Accounting Overview and Purpose Accounting Overview and Purpose Definitions And Definitions And Forms of Financial Statement Forms of Financial Statement

communicate communicate communicate in a precise and ordered manner communicate in a precise and ordered manner manner that manner that for anyone anyone to interpret, a language has been been developed language language of business and it allows people people to communicate transactions of a business or even an entire industry transactions industry expressions and ideas published by Pacioli expressions and ideas published by Pacioli expressions expressions Pacioli were Pacioli were known as double double-entry accounting or double-entry entry bookkeeping time. Pacioli's double-entry bookkeeping was that, Pacioli's that, "for that there that there there should be a separation of five different there should be a separation of five different different different