| Submitted by: | johnsonfe |
| Date: | 10 / 25 / 2008 |
| Category: | Business and Marketing |
| Words | Pages: | 1359 | 6 |
| Views: | 211 |
Accounting for Decision Making
There are two parts to this assignment. After researching the required background information, I will combine the parts into a three to five page essay. In part one; I will define the following terms Generally Accepted Accounting Principles, Historical Cost, Accrual Basis versus Cash Basis versus Cash Basis Accounting, and Current Assets and Liabilities versus Non-Concurrent Items. I will also explain why this concept is important to financial statements. In part two; I will refer to the annual reports for General Motors Corporation, Home Depot, and Billabong International Limited. I will describe the general organization of each financial statement and explain in my opinion which is more useful: Net Income or Cash from Operating Activities? To summarize, I will make one prediction about each company from that company’s financial statements.
Generally Accepted Accounting Principles (GAAP) is financial statements prepared under a set of principles or guidelines. In the United States the GAAP is a detailed accumulation of specific rules generated by a series of authoritative private companies and for local and state governments. “GAAP for local and state governments operates under different set of assumptions, principles, and constraints, as determined by the Governmental Accounting Standards Board (GASB)” (www.gasb.org). The United States government as well as any other country whose government is based on English common law believes that the public sector does not possess the proper resources or the depth of knowledge to set accounting standards. They feel that the private sector is better equipped to monitor and regulate accounting practices. The fact that the GAAP is extremely important to the preparation of financial statements is a given. It is the only guidance given and is key to standardization.
Historical Costs is a generally GAAP requiring all goods or assets used in production to be valued by...
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