Accounting Principles And Financial Statements

1682 WordsApr 25, 20167 Pages
Statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP), which refers to a set of rules, standards, and practices. They are used throughout the accounting industry to prepare and standardize financial statements that are issued and help investors and creditors compare companies within the same industry. Companies are expected to follow generally accepted accounting principles when they report their financial information. GAAP affects the measurement of economic activities and the disclosure of information about activities. It also affects the preparation and summarization of economic information, and the record keeping of measurements at average intervals. Other than the numbers on the balance sheet, income statement, and statement of cash flows, a great deal of information is provided in the notes to the financial statements. They contain information that may be significant and include tables which are included as a footnote. The notes will contain information about the company accounting policies, including information on securities held, inventories, debt, and other elements which can determine a company 's financial position. Under GAAP, companies often have discretion to use varying methods for valuing assets, and recognizing costs and revenue. The "Summary of Significant Accounting Policies" appears as the first note to the statement or in a separate section. Accounting control procedures are systems designed to ensure all employees
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