Guide to Financial Statements, Research Paper Example

Generally Accepted Accounting Principles (US GAAP)

The mutual collection of accounting principles and criteria that organizations apply for the compilation of their financial statements. The generally accepted accounting principles (GAAP) are established by regulation boards. GAAP is basically the conventionally accepted manner of documenting and declaring accounting information. The generally accepted accounting principles (GAAP) are imposed upon organizations in order to facilitate the investors having the minimal index of consistency in the financial statements which are applied toward organizations for the purposes of credit and investment. GAAP encompasses items which include the recognition of revenues, classifications of items on the balance sheets and the share measurements which are obligated. Organizations are anticipated to comply with GAAP regulations when documenting the financial information by means of the financial statements (Baruch College, 2008; Walther, 2010).

International Accounting Standards (IFRS)

The international accounting standards are a more established collection of criteria which dictate the manner by which specific transactions and peripheral events should be demonstrated in financial statements. Prior to 2002, the international accounting standards were published by the IASC (International Accounting Standards Committee). Subsequent to 2001, the novel collection of criteria have been acknowledged as the IFRS (International Financial Reporting Standards). The collection of criteria has been published by the IASB (International Accounting Standards Board). The IASC does not have the right to force compliance with its accounting criteria. Notwithstanding, many nations have the requisites that organizations which are publicly traded prepare their financial documents in accordance with the criteria established by the IASC (Benedicto, 2008; Edwards et al., 2011).

Securities and Exchange Commission (SEC)

The United States´ SEC (Securities and Exchange Commission) is one of the units within the government of the United States. The SEC is responsible for the enforcement of the federal securities regulations, supervision of the securities concerns and the creation of the securities regulations. The SEC was formulated as a result of the Securities Exchange Act in the mid-1930s. The functions of the SEC have been modified over time with the Investment Act of 1940that had been ratified by Congress and the Sarbanes- Oxley Act of 2002. The function of the SEC is to provide protection for investors, enable the formation of capital while maintaining the securities markets in an equitable, organized and efficient manner. The SEC has the authority to levy civil enforcement litigation against organizations which have been accused of perpetrating accounting misrepresentation. In addition, the SEC regulates the markets against insider trading and infringements of the securities laws (Baruch College, 2008; Walther, 2010).

Public Company Accounting Oversight Board (PCAOB)

The PCAOB was e stablished by Congress in order to monitor the auditing endeavors of publicly traded organization. The primary purpose of the PCAOB is to provide protection for the investors´ interests and to increase the public interest in the creation of accurate, informative and independent auditing reports. The PCAOB supervises the auditing activit9ies of the stock brokers and financial vehicle dealers in order to ensure that they are in compliance with the federal securities laws (Benedicto, 2008; Edwards et al., 2011).

Annual Report 10 K

The laws established for federal securities in the United States have the requisite of publicly owned organizations revealing their financial information annually. The SEC 10K formed is applied in order to reveal the annual reports. The annual reports which are filed on the SEC Form 10 K give a complete overview of the organization´s financial and business circumstances. The 10 K form also incorporates the audited financial statements. Depending on the size of the organization, the 10 K forms must be filed periodically. In the case of organizations which filed under the category of non- accelerated filing, the 10 K reports must be filed every three months. In the circumstance of the organizations which have revenues between $75 million and $700 million, the 10K forms must be filed every 75 days. In the case of the large organizations who have revenues exceeding $700 million, the 10K forms must be filed every two months (Benedicto, 2008; Edwards et al., 2011).

Quarterly 10 Q

The 10Q report must be field every 45 days for organizations which have revenues less than $75 million. In the event that the organizations have revenues between $75 million and $700 million, the 10 Q forms must be filed every 40 days (Benedicto, 2008; Edwards et al., 2011).

Form 8 K

The 8K for is the currently fields report which documents all of the major events that are pertinent to shareholders. The 8K is field in the case of bankruptcy cessation of operations and acquisitions of assets (Benedicto, 2008; Edwards et al., 2011).

Part II.

The basic format of the income statement are divided into income and expenses. The basic format of the balance sheet is separated into assets, shareholder´s equity and liabilities. The basic format of the statement of cash flows is separated into operating activities, investing activities and financing activities. The statement of retained earnings details the modifications of an organizations´ revenues over a period of time. The line items include dividends, losses profits issuance and redemption of stock (Benedicto, 2008; Edwards et al., 2011).

References

Baruch College (2008). Guide to financial statements. City University of New York.

Benedicto, M. S. (2008). Introduction to financial accounting. IE Business School.

Edwards, J. D., Hermanson, R. H. & Maher, M. W. (2011). Accounting Principles: A Business Perspective Financial Accounting Volume 1. CreateSpace Independent Publishing Platform.

Walther, L. M. (2010). Financial Accounting: Principles of Accounting. CreateSpace Independent Publishing Platform.