Gaap Model

INTRODUCTION

Accounting has been around for thousands of years and it still isn’t perfect, so it continuously evolves towards standardizing and simplifying methods for all users.

Some argue that accounting developed purely in response to the needs of the time brought about by changes in the environment and societal demands. (John R. Alexander 2002) So, whatever “time” that was morphed into all the time didn’t it!

Furthermore, It would be easy to become lost in the sauce with principles, financial jargon, and the many details within financial statements, however here we will break it all down in a natural fashion.

The accounting system for setting up, maintaining and auditing books is all generalized within the GAAP structure. The art of analyzing the financial position and operating results of a business from studying its sales, purchases, assets, etc., has become much easier to understand in recent years as the Financial Aid Standards Board (FASB) has joined forces with the Securities and Exchange Commission (SEC) to begin the Accounting Standards Codification (ASC) which launched on July 1, 2009.

PART I

At first, the phrase “generally accepted accounting principles” (GAAP), sounds like a reference for a simplified process for bookkeeping, but do not let the title fool you. This phrase is home to ten principles that house a seemingly immeasurable amount of data.

First, the GAAP consists of three important sets of rules:

(1) the basic accounting principles and guidelines,

(2) the detailed rules and standards issued by FASB and its predecessor the Accounting Principles Board (APB), and

(3) the generally accepted industry practices.

Within these rules you will find the GAAP principles which apply to most financial statements.

Monetary unit assumption require that records be recorded using a stable currency, such as here in the United States we use U.S. dollars for acknowledging monetary values. For Samsung this became a chore,...