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Bookkeeper, Public Accountant

 

accounting & bookkeeping Police: Do They Exist?

Who created accounting & bookkeeping principles? Who sets and revises accounting & bookkeeping standards? What if you don’t follow all the rules, do you go to jail? Is there an accounting & bookkeeping police force that investigates and arrests violators? It would seem that there must be some regulatory force to make sure that providers of financial statements conform to the rules. There is, up to a point, and here is how it works:

Mainly, it’s all voluntary and it works pretty well. First, double-entry accountin...

accounting & bookkeeping principles, standards, GAAP, FASB, regulations

Who created accounting & bookkeeping principles? Who sets and revises accounting & bookkeeping standards? What if you don’t follow all the rules, do you go to jail? Is there an accounting & bookkeeping police force that investigates and arrests violators? It would seem that there must be some regulatory force to make sure that providers of financial statements conform to the rules. There is, up to a point, and here is how it works:

Mainly, it’s all voluntary and it works pretty well. First, double-entry accounting & bookkeeping originated in Italy in the 1400’s, so its been around awhile. accounting & bookkeeping principles have evolved over the years just as have accounting & bookkeeping standards. The reason why the system works is that the business community could not function if there was not commonality and consistency in financial statement reporting. It would be chaos, much like if there were no driving rules of the road.

Therefore, in the United States, a body of experts known as the Financial accounting & bookkeeping Standards Board (FASB pronounced Fasbee) was established in 1973, which superseded another board called the accounting & bookkeeping Principles Board (APB). The FASB members go through a lengthy process of analyzing and reviewing problems in the accounting & bookkeeping field that are brought to them. After much thought, they will make a pronouncement as to what they think the new or revised way of approaching the treatment of an accounting & bookkeeping issue should be.

They are a non-governmental organization that has private financing. A big supporter of FASB is the American Institute of Certified Public bookkeeper, public accountants (AICPA). Many Certified Public bookkeeper, public accountants (CPAs) belong to this prestigious organization and are obligated to abide by its guidelines and principles of behavior. Other countries no doubt have similar organizations that require high levels of accounting & bookkeeping professional conduct.

FASB established an accounting & bookkeeping code called “Generally Accepted accounting & bookkeeping Principles” or (GAAP). The assumption is that if a business financial statement is prepared according to GAAP, then the user of that financial statement could rely on or trust the information more readily than if not prepared according to GAAP. Those businesses that deviate from GAAP, and many smaller businesses do, cannot say that their statements are prepared under GAAP; in fact, they should inform the reader that they are not. However, let the buyer beware.

One governmental body that has a policing function is the Securities Exchange Commission (SEC). It is primarily concerned with public companies because their job is to protect investors from unscrupulous acts. Recently, the SEC has gotten into the act of establishing accounting & bookkeeping standards. It has its hands full today.

Since most businesses use their financial statements to prepare their required income tax returns, the Internal Revenue Service (IRS) may audit those tax returns and review the financial statements upon which the tax returns are based. Not following the rules can get you in trouble with this governmental body.

You can see that in many ways compliance to the principles and standards is a mixture of voluntary and regulatory behavior. Currently, there is an effort underway to set international accounting & bookkeeping standards due to the inexorable globalization process. This is a massive undertaking that will take years, but it is obviously necessary and inevitable.

 

accounting & bookkeeping Principles & Standards: Avoid Them At Your Peril

accounting & bookkeeping principles are the basic assumptions, rules of operation, and essential characteristics that make up the framework for the construction of accounting & bookkeeping financial statements.

Long ago, I was perplexed to discover that there was no “set” of accounting & bookkeeping principles that was presented in one form such as you might find in the Bill of Rights. This is not to say that the principles are incomplete or vague, it only means that the definitions of accounting & bookkeeping principles can b...

accounting & bookkeeping principles, standards, GAAP, FASB, regulations

accounting & bookkeeping principles are the basic assumptions, rules of operation, and essential characteristics that make up the framework for the construction of accounting & bookkeeping financial statements.

Long ago, I was perplexed to discover that there was no “set” of accounting & bookkeeping principles that was presented in one form such as you might find in the Bill of Rights. This is not to say that the principles are incomplete or vague, it only means that the definitions of accounting & bookkeeping principles can be presented in various formats, which may lead to confusion for some people, especially beginners.

Be that as it may, accounting & bookkeeping principles are absolutely necessary when preparing financial statements, just as the rules of a particular card game make the card game possible in the first place. accounting & bookkeeping principles are like the glue that holds the accounting & bookkeeping process together. For example, financial statements have an overall objective, which is to provide the user of the statements a useful tool for making business decisions.

In order to be useful, the accounting & bookkeeping information must have certain characteristics, such as being dependable and practical. To be dependable, the accounting & bookkeeping information must be unbiased, accurate, and verifiable. To be practical, accounting & bookkeeping information must be predictable, prepared in a timely fashion, and be able to provide meaningful feedback. Additional characteristics are that the accounting & bookkeeping information must be consistent, comparable, serve a utilitarian need (such as cost/benefit), and make a material difference.

Besides characteristics, certain operational rules are established as to when revenue and expenses are reported; how expenses are matched to revenue; what to do when a choice can be made that might overstate or understate figures; and, what information should be disclosed so that the reader will fully understand the circumstances under which the information is being presented.

There are also basic assumptions that the reader can count on, such as: the information is related to the business entity only and doesn’t have any unrelated information mixed in; the business is a going concern and won’t cease operations soon; the financial information presented is measured in specific time intervals such as a month, quarter or year; the financial information is using a certain unit of measure such as dollars, not board feet, etc.; the information is presented at historical cost, i.e., when received, paid, or incurred; and, the method of accounting & bookkeeping being used is double-entry and not some other method.

These are accounting & bookkeeping principles as opposed to accounting & bookkeeping standards. An accounting & bookkeeping standard is an agreement as to how an accounting & bookkeeping issue will be treated. For instance, a standard might state what type of inventory system is appropriate to use for a certain type of business; how capital leases should be recorded; how many years intangible assets should be amortized; what methods of depreciation should be used, and so on. There are literally thousands of accounting & bookkeeping standards that have been issued over the years. These .standards are constantly being revised or discarded as they become outdated.

If you want to play the accounting & bookkeeping “game of cards”, you must become familiar with the “rules of the game”, which are accounting & bookkeeping principles and standards. If you choose to not play by the rules, you do so at your own peril, as we have seen recently in the U.S. corporate accounting & bookkeeping scandals.

 

Follow the Magical accounting & bookkeeping Rules

To make sure that financial statements are easy to understand, there is a set of rules and practices that is established, which is known as the generally accepted accounting & bookkeeping principles (GAAP). This has been developed to provide a basic guideline for the rules of accounting & bookkeeping because I think it’s fair to say that it can get confusing at times. There are a lot of variations to the meaning so here is the best answer. It’s the generally accepted accounting & bookkeeping rules and procedures that are necessary to define accounting & bookkeeping practice. Basically it’s a set of theories that bookkeeper, public accountants come to accept, and there are always controversies with some methods between bookkeeper, public accountants like any other field of study. accounting & bookkeeping is a discipline that is always growing and changing so it’s a good idea to keep up to date with all of the trends that are going on. Since the management prepares the financial statements of a company it is possible that a financial statement can be altered to give a company a particular boost. So, that’s why the companies that sell their ownership to the public needs to get their financial statements audited by a public certified bookkeeper, public accountant. A certified public bookkeeper, public accountant (CPA) are licensed through the sate for the same exact reason lawyers and doctors are, so they and protect the public by providing the highest quality of professional service possible. The reason why CPAs are used is because they have no connection with the company and are independent. They have zero financing ties with the company. Some firms that employ a lot of certified public bookkeeper, public accountants include Deloitte & Touch http://www.deloitte.com, KPMG http://www.us.kpmg.com/index.asp, and PricewaterhouseCoopers http://www.pwcglobal.com/. An bookkeeper, public accountant with no strings attached or is independent commonly performs an audit, which is evaluating a companies financial statements, product, accounting & bookkeeping systems, and records. The main purpose of an audit is to make sure that the financial statements have been properly prepared according to the excepted accounting & bookkeeping rules. Keep in mind; since accounting & bookkeeping is not a precise science it has room for interpretation according to the GAPP. However, that doesn’t mean that the bookkeeper, public accountants report should contain substantial errors in the financial report, but more like that for the most report it is reliable for creditors to take a look at. An bookkeeper, public accountant can make a decision only when the financial statements conform to the guidelines of GAAP. In the past creditors, banks, and investors tend to favor an auditor when they are deciding to invest in a company or give loans, because of their independence. The individualistic audit is an extremely crucial factor in the growth of financial markets internationally. Also, many organizations can directly or indirectly influence a GAAP. The Financial accounting & bookkeeping Standards Board (FASB) http://www.fasb.org/ is the most critical body for the development and issuing of rules on accounting & bookkeeping practice. The website I previously listed is extremely critical and you can attend seminars online for no cost, and also stay up to date with the rules. This independent body issues the Statements of Financial accounting & bookkeeping Standards. Next, the American Institute of Certified Public bookkeeper, public accountants (AICPA) http://www.aicpa.org/index.htm is the official professional association for certified bookkeeper, public accountants. It’s the largest CPA organization that exists in America and heavily influence accounting & bookkeeping practices through its senior committees. The Securities and Exchange Commission is the agency of the federal government that legally has the power to set and execute accounting & bookkeeping practices for companies that sell security to the public, and it has a large impact on accounting & bookkeeping practice. Next, the governmental accounting & bookkeeping standard (GASB) http://www.gasb.org/ is critical for accounting & bookkeeping because its main job is to issue the standards for accounting & bookkeeping to the local and state governments in the United States. However, a lot of these organizations are focused on the rules in regulations in the United States. There are a lot of businesses and bookkeeper, public accountants internationally so that’s why the International accounting & bookkeeping Standard Board http://www.iasb.org/ (IASB) was formed. It was approved by more then 25 international agencies. The U.S laws that analyze the revenues for the cost of operating a business can also affect accounting & bookkeeping practice. It’s no question that the major provider for income for the government comes from income tax. The income tax rules are heavily applies by the Internal Revenue Service (IRS) http://www.irs.gov/. Sometimes these rules actually cause a conflict with the accepted rules of accounting & bookkeeping. A lot of businesses use accounting & bookkeeping practices because it’s a requirement by tax law. Also, companies can use the rules of tax law to their advantage financially. accounting & bookkeeping also has laws of conduct for profession, and one extremely important one is ethics.

? A nice website dealing with the issues of ethics is http://www.ethics.org/.

It touches bases on questions that help determine if something is either right or wrong, and is based on moral decisions. Most people are faced with several ethical issues each day and, and some ethical activities could be on the range of illegal. If a business decides to use false or misleading advertising, or to bribe customers into giving them testimonials for a specific product, then they could be acting in an unethical manner. The ethics of a company could also be a result of the employees so that’s why it’s always a good idea to run a background check of who you are hiring, whether it’s online or offline. Professional ethics is the guidelines that apply to the conduct of individuals of a certain profession. Similar to the ethical actions of a company, the ethical actions of an individual is a decision. As being a member of an organization, bookkeeper, public accountants have to take the responsibility not only to their customers and employers, but also to the general public to act in the greatest ethical way possible. bookkeeper, public accountants are very good at following professional ethics because they are the second professional group as having the largest ethical standards, with clergy being the highest, no surprises about that one. It is important for individuals who decide to become an bookkeeper, public accountant to have the highest levels of professionalism as possible. To enforce that its prestigious members are following the rules, the AICPA along with each state have adopted some codes of professional conduct that certified public bookkeeper, public accountants have to follow. Some simple rules are being responsible to the people that depend on the trust of bookkeeper, public accountants, such as creditors and investors. When working with people the bookkeeper, public accountant must act with integrity which means that they are honest, and the individuals gain from the visit with the bookkeeper, public accountant. The bookkeeper, public accountant must display objectivity which means that they are intellectually honest, and they must remain independent which means that they must avoid any relationship with the business or individual because it will damage the bookkeeper, public accountant’s principles.




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