Below is an essay on "Accounting Principles" from Anti Essays, your source for research papers, essays, and term paper examples.
According to “Accounting Principles” (2012), Accounting Principles are an official set of rules, standards, and procedures a company must follow when reporting financial data. The most common set of rules or practices uses by most businesses what is known as the generally accepted accounting principles (“Accounting Principles”, 2012). Most companies in the United States follow generally accepted accounting principles and are required to do so to remain on many major stock exchanges. The Financial Accounting Standards Board is the source of most generally accepted accounting principle rules in the United States (“Accounting Principles”, 2012). These rules give investors confidence in the accuracy of financial statements when comparing companies (“Accounting Principles”, 2012). As accounting principles can be different around the globe, many countries have their own version, which is often slightly different. Generally accepted accounting principles cover such things as revenue recognition, balance sheet item classification and outstanding share measurements (“Accounting Principles”, 2012). Investors should be cautious when looking a company who does not follow generally accepted accounting principles. As generally accepted accounting principles are only a set of standards, be mindful when reviewing financial statements as they are subject to distortion.
Commercial accounting rules determine the commercial results of an entity, and establish whether that entity has recognized a profit or a loss for a given period (“What is commercial accounting”, 2009). According to “Financial Accounting Notes” 2009, commercial accounting is the maintenance of daily record of all financial transactions in such manner that it would help in the preparation of suitable information regarding the financial affairs of a business or an individual. The purpose of commercial accounting is to educate business leadership about company performance and...