《Intermediate Accounting, 9th中级会计学 Nikolai》ch01.pptVIP

Objectives 1. Understand capital markets and decision making. 2. Know what is included in financial reporting. 3. Explain generally accepted accounting principles (GAAP) and the sources of GAAP. 4. Identify the types of pronouncements issued by the FASB. Objectives Companies need large amounts of capital for operations. Companies may obtain capital by issuing capital stock... Capital Markets Accounting Information Economic Activities and Decision Making Comparison of Financial and Managerial Accounting Financial Reporting Financial Reporting The balance sheet (or statement of financial position) which summarizes a company’s financial position at a given date. The income statement which summarizes the results of a company’s income producing activities for a period of time. The statement of cash flows which summarizes a company’s cash inflows and outflows for a period of time. Generally Accepted AccountingPrinciples (GAAP) Hierarchy of Sources of GAAP A. Pronouncements of authoritative bodies (FASB, APB, CAP, SEC). B. Pronouncements of bodies of expert accountants that have been exposed for public comment. C. Pronouncements of bodies of expert accountants that have not been exposed for public comment. History of GAAP in the Private Sector Reasons for Forming APB 1. To alleviate criticism about the process of formulating accounting principles, which included wider representation. 2. To create a policy-making body whose rules would be binding on companies rather than optional. Criticisms of the APB 1. Independence. The members of the APB were part-time volunteers whose major responsibilities were to the business, governmental, or academic organization employing them. 2. Representation. The public accounting firms and the AICPA were too closely associated with the development of accounting standards. 3. Response time. Emerging problems were not solved quickly enough by the part-time members of the APB. Structure of the FASB Types of Pronouncements Issued by t