Financial Accounting: Study Guide

Pologeorgis (2012) stated that the diversity of accounting principle has an essential impact on the stock markets, corporate management, and financial reporting. He pointed that when people seeking for international capitals, varies of dissimilar accounting principles create discrepancies in their financial reporting. If people cannot understand the differences between IFRS and GAAP, they may have the chance to make the wrong decisions and loss money in the capital markets. Pologeorgis (2012) also mentioned that international investors have to relearn the new principal in order to be more familiar with the international standards. Based on above, there is a keen motivation for people to understand the differences and similarities of GAAP and IFRS. This research will show business people the main similarities and differences of GAAP and IFRS.

1. The Allowance for uncollectible accounts currently has a credit balance of $900. After analyzing the accounts in the accounts receivable subsidiary ledger, the company's management estimates that uncollectible accounts will be $15,000. What will be the amount of uncollectible accounts expense reported on the income statement?

1. How does PPLS create value for its customers? What are the critical risks that it has to manage well?

Generally accepted accounting principles (GAAP) allow companies wide latitude in the choice of accounting policies. After a firm chooses a set of accounting policies, current accounting rules permit changes from one alternative policy to another at the discretion of the management. Since reported accounting figures are widely used by a number of external parties, managers of firms have incentives to choose accounting policies in order to influence the behavior of these parties. A variety of managerial motives for

Tax rates other than the current tax rate may be used to calculate the deferred income tax amount on the balance sheet if

ACC/561 Final Examination Study GuideThis study guide will prepare you for the Final Examination you will complete in the final week. It contains practice questions, which are related to each week’s objectives. In addition, refer to each week’s readings and your student guide as study references for the Final Examination.

Accountant I Exam Study Guide – All what you need in one book for top scores

The general accepted accounting principles (GAAP) numbers ensure a level of consistency but they do not take into consideration the particularities of each firm, or at least of each industry. Collins et al. (1997) observed a decline in the value relevance of GAAP earnings, since 1953, and even though research on non-GAAP numbers starts and focuses around the late 1990s, in 1973 the Securities and Exchange Commission (SEC) issued a warning for the non-GAAP measures (Accounting Series Release No 142, SEC 1973).

There are several differences between the International Financial Reporting Standards (IFRS) and the U.S. Generally Accepted Accounting Principles (GAAP). The IFRS is considered more of a "principles based" accounting standard in contrast to U.S. GAAP which is considered more "rules based." By being more "principles based", IFRS, arguably, represents and captures the economics of a transaction better than U.S. GAAP. As a team me collaborated to answer the following seven questions.

3) Sheffield Company had the following information taken from its 2006 adjusted trial balance: Sales, $400,000; Sales

GAAP (Generally Accepted Accounting Principles) determine the content and format of financial statements. SEC (Securities and Exchange Commission) requires publicly traded companies to issue annual audit. Concerns are about adequacy of disclosure; and behavioral implications are secondary.

Companies following GAAP can manage earnings by simply altering its accounting policy to select those accounting principles that benefit them the most. Entities have a host of reasons for selecting those principles that will paint the rosiest financial picture. Some would argue that the market demands it, as reflected by the stock price punishment for companies that differ by as little as one penny per share from prior estimates. External market pressures to “meet the numbers” conflicts with market pressure for transparency in financial reporting.

Lately, it is becoming more and more common for companies to report their financials using Non-GAAP earnings. “A non-GAAP financial measure is a numerical measure of an issuer’s historical or future financial performance, financial position, or cash flow that excludes amounts that are found in GAAP financials” (SEC, 2002). Non-GAAP earnings are an alternative way of reporting the performance of a company as opposed to GAAP earnings. Many companies often report non-GAAP earnings alongside the required GAAP earnings. They claim that non-GAAP earnings more accurately depicts what the company is going through and precisely shows their financials. A few common examples of non- GAAP earnings are pro forma earnings, cash earnings, operating earnings, and EBITA (SEC, 2002). Pro forma refers to earnings, which exclude non-recurring items (SEC, 2001). It is regularly found that technology startups are responsible for a lot of the use of non-GAAP earnings because these corporations remove certain items like taxes in their non-GAAP accounting to turn loss into profit (Young 2013). Because of the lack of standardization and the potential for creative accounting, it makes it difficult to draw relevant comparisons among companies or draw meaningful information from these statistics. These reasons alone make the SEC and investors very weary about the implementation of it.

GAAP is exceptionally useful because it attempts to regulate and normalize accounting definitions, assumptions, and methods. Because of generally accepted accounting principles one is able to presuppose that there is uniformity from year to year in the methods that are used to prepare a

Develop the ability to understand and interact with the nature of the financial statements in reality.