Acc 201 Module 1 Case

Financial Statements

Module 1 – Case

Heather F. Spears

TUI University

Accounting 201, Summer Session

Dr. Sofoklis Hiotellis

July 30, 2012

Generally Accepted Accounting Principles or GAAP as it is known in the accounting realm is defined as a type of framework with strict and conforming guidelines for financial accounting. Its main purpose is to provide proper regulations and guidelines for firms or corporations to prepare and present their income and expenses to include liabilities and assets for their financial statements. This principle is used in the United States and is slowly being phased out to make room for the International Financial Reporting Standards or IFRS. This is to make way for more globally standardized rules of engagement. It will streamline how financial reporting is done worldwide.

The International Accounting Standards or IFRS is another set of regulations for financial entities to follow. Many worldwide companies are turning to this type of accounting regulation in order to streamline their business financial statements. According to IFRS.org, they provide “high quality information” that should be “transparent for users and comparable over all periods presented”. (ifrs.org, 2012) There are specific sets of rules and regulations that are set by the International Accounting Standards Board that standardize how financial documents are prepared. This is “so that investors, organizations, and governments have a basis for comparison”. (IFRS, 2009-2012)

The Securities and Exchange Commission or SEC is the big brother in the sky watching and regulating all the way to the bank. It was “created under the Securities and Exchange Act of 1934” (James Don Edwards). It is an agency within the government that acts as a pseudo referee for a lack of a better word. It ensures that any interstate sale of securities such as stocks and bonds are dealt with appropriately and legally. They are the authority when it comes to...