Acc/537 Week 1 Individual Assignment Essay

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Basic Accounting Concepts and Business Structures ACC/537 FINANCIAL ACCOUNTING All businesses has a obligated task to prepare financial statements that shows the performance of the business at the end of a accounting period. Accounting standards regulation is important because it helps to ensure that companies are transparent in preparation of financial statements which reflects the true results of the company’s outcome. If there are no regulations for preparing financial statements, anyone can prepare and present the financial statements to the public without considering credibility. According to Financial Accounting Standard Board (FASB) the hierarchy of Generally Accepted Accounting…show more content…
Comparability allows users to compare similar companies in the same industry group and to make comparisons of performance over time. Reliability of information is truthful, accurate, and complete, capable of verification (e.g., by a potential investor) with nothing significant missed. Objectivity of accounting information is not biased toward a particular user group or investment at stake. Accrual basis vs. cash basis accounting methods are quite confusing, particularly for those who have just started a new business. The accrual method is usually considered as a less likely choice if a non-accountant will perform the accounting process (Cantoria, Ciel S., 2011). The accrual method is complicated because it involves correlated actions of recognizing, amortizing or deferring expenses or income, without considering if an actual exchange of cash had taken place. The cash basis method, in which the income and expense transactions are included, is often the popular choice because it is simple. The most common forms of business are the sole proprietorship, partnership, corporation, S corporation, and Limited Liability Company (LLC). The LLC is a relatively new business structure allowed by state statute. The sole proprietorships are the simplest form of business. The owner is only one person and

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