Below is an essay on "Accounting Principles" from Anti Essays, your source for research papers, essays, and term paper examples.
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Accounting is the vernacular of business. It is the system of recording, summarizing, and analyzing a unit’s financial transactions. Effectively conveying this information is the key to success in every business. First, there are general rules that govern the field of accounting and they are known as the basic principles of Accounting. Second, there are four basic financial statements that are used in the world of Accounting. Third, Managers, creditors, investors and employers use information supplied by accountants to answer many questions. Finally, Businesses need to be held responsible for the processes they use to run a business; accounting is one of many methods used.
First, there are general rules that govern the field of accounting and they are known as the basic principles of Accounting. Accountants use the generally accepted accounting principles or (GAAP) to direct them in recording and reporting financial information within their company. The Generally Accepted Accounting Principles comprises an expansive set of principles that have been developed by the accounting profession and the Securities and Exchange Commission (SEC). The Generally Accepted Accounting Principles consists of three important sets of rules: (1) the basic accounting principles and guidelines, (2) the detailed rules and standards issued by Financial Accounting Standards Board and its predecessor the Accounting Principles Board, and (3) the generally accepted industry practices.
Second, there are four basic financial statements that are used in the world of Accounting. Businesses report information in the form of financial statements required by the Generally Accepted Accounting Principles issued on a monthly, quarterly or yearly basis. Those basic statements are the balance sheet which includes the components of the accounting equation: assets equal liabilities plus shareholders’ equity. The income statement is a firm's...