Accounting Concepts and Business Structures

Accounting Concepts and Business Structures

In this paper I want to explain the basic accounting concept and business structures, I will describe the source of general accepted accounting principles and the source of hierarchy. Also I will discuss the using of the qualities of accounting information, the different between accrual based accounting and cash basis of accounting, and the types of business structures and the defining features of each structure.

From my readings this week (Kieso, Weygandt, & Warfield, 2007) I learned that the General Accepted Accounting Principles (GAAP) are set of standard that generally accepted and it have authoritative support. The sources of (GAAP) are “FASB standards, Interpretations, and Staff Positions; APB Opinions; and AICPA Accounting Research Bulletins” (Kieso, Weygandt, & Warfield, 2007, p 12). There is no single resource of the general accepted accounting principles hierarchy but American Institute of Certified Public Accountants (AICPA) established hierarchy on industry auditing and statements of position. The hierarchy important because it represent the house of GAAP, the hierarchy includes four categories A, B, C, and D in case of conflict in accounting principle the companies should follow the categories starting from the higher (A has authority over B, C, and D, also B has authority over C and D, and C has the authority over D).

Good accounting information is the qualities of accounting information that provide more useful information to the readers, it help the readers understand the financial status for the company and making decisions. (Kieso, Weygandt, & Warfield, 2007) said that the two primary qualities that make the accounting information helpful for the readers are relevance and reliability. The relevance information has predictive value, feedback value, and timeliness, it help the users of accounting information to make a decisions. The reliability is most important quality of accounting...