TAILIEUCHUNG - FINANCIAL ACCOUNTING AND ACCOUNTING STANDARDS

Understandings about what counts as ‘professional’ conduct, for example, are not necessarily uniform or consistent. This is because those involved in regulation are continuously engaged in maintaining and asserting their status (Willmott, 1991) in relation to each other and to significant others (., politicians, civil servants, journalists, academics) who have their own agendas and may (even wilfully) ‘misinterpret’ , question, or criticise the ‘professional’ meanings that accountants seek to ascribe to their conduct. However, this process is not adequately analyzed as a universal dance of life. For it is also an historical game whose rules and conventions are. | CHAPTER 1 FINANCIAL ACCOUNTING AND ACCOUNTING STANDARDS OVERVIEW Accounting is the language of business. As such accountants collect and communicate economic information about business enterprises or other entities to a wide variety of persons. To be useful financial statements must be clearly understandable and comparable so that users may compare the performance of one business with the performance of the same business for a prior period or with the performance of another similar business. Therefore all general purpose financial statements should be prepared in accordance with the same uniform guidelines. In this chapter we will examine the history and sources of current financial accounting standards generally accepted accounting principles . SUMMARY OF LEARNING OBJECTIVES 1. Describe the essential characteristics of accounting. The essential characteristics of accounting are 1 identification measurement and communication of financial information about 2 economic entities to 3 interested persons. 2. Identify the major financial statements and other means of financial reporting. The financial statements most frequently provided are 1 the balance sheet 2 the income statement 3 the statement of cash flows and 4 the statement of owners or stockholders equity. Financial reporting other than financial statements may take various forms. Examples include the president s letter or supplementary schedules in the corporate annual report prospectuses reports filed with government agencies news releases management s forecasts and descriptions of an enterprise s social or environmental impact. 3. Explain how accounting assists in the efficient use of scarce resources. Accounting provides reliable relevant and timely information to managers investors and creditors so that resources are allocated to the most efficient enterprises. Accounting also provides measurements of efficiency profitability and financial soundness. 4. Identify some of the challenges facing accounting. .

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