Read & write

SPECIALIST BLOGS

Most Read Content

Login Form

RSS (Real Simple Syndication) is the talk around the net these days because of its many benefits. However many people are [...]
Are you treating your business like a Fortune 500 Company or like a Yard Sale? Take this quiz to find out. How would you [...]
In order to make the most of your weight loss program, finding the most effective ways to burn fat will maximize your [...]
Food diets that work are largely common sense! See how you can succeed the first time!With so many of us overweight, it's [...]
One of the toughest decisions that internet marketers must make when when writing articles and website content is what [...]
Have you any idea what it could be?You need to take action. I know, it seems so obvious. Yet so many people do not. I do not [...]
It is a well known and widely accepted fact, that E-books.FREE E-booksare one of the best weapons in a viral marketing [...]
Those of us who regularly shop on line are familiar with the array of free gifts, free bonuses and just plain freebies that [...]
Pay Per Click advertising is a method of advertising that is currently taking the Internet world by storm; especially over [...]
The world wide web has given us the great opportunity and freedom to do business all around the world from wherever we may [...]
Do you belong to an online social networking website? With their recent rise in popularity there is a good chance that you [...]

Accounting Principles

1 1 1 1 1 1 1 1 1 1 Rating 3.50 (1 Vote)

If everyone involved in the process of accounting followed their own system, or no system at all, there's be no way to truly tell whether a company was profitable or not. Most companies follow what are called generally accepted accounting principles, or GAAP, and there are huge tomes in libraries and bookstores devoted to just this one topic. Unless a company states otherwise, anyone reading a financial statement can make the assumption that company has used GAAP.
 
If GAAP are not the principles used for preparing financial statements, then a business needs to make clear which other form of accounting they're used and are bound to avoid using titles in its financial statements that could mislead the person examining it.  

GAAP are the gold standard for preparing financial statement. Not disclosing that it has used principles other than GAAP makes a company legally liable for any misleading or misunderstood data. These principles have been fine-tuned over decades and have effectively governed accounting methods and the financial reporting systems of businesses. Different principles have been established for different types of business entities, such for-profit and not-for-profit companies, governments and other enterprises. 
 
GAAP are not cut and dried, however. They're guidelines and as such are often open to interpretation. Estimates have to be made at times, and they require good faith efforts towards accuracy. You've surely heard the phrase "creative accounting" and this is when a company pushes the envelope a little (or a lot) to make their business look more profitable than it might actually be. This is also called massaging the numbers. This can get out of control and quickly turn into accounting fraud, which is also called cooking the books. The results of these practices can be devastating and ruin hundreds and thousands of lives, as in the cases of Enron, Rite Aid and others.

You are not authorised to post comments.

Comments powered by CComment

InterServer Web Hosting and VPS

Who's Online

We have 42 guests and no members online

Twitter