Basic Concepts In Accounting Essay

723 words - 3 pages

Explaining Basic Concepts and Business Structures
Kristin Elam
ACC/537
March 24th, 2014
Rebecca Kime

Topic 1: Identify and describe the sources of GAAP. Identify source hierarchy and
why it is important.
“Although principles and practices continue to provoke both debate and criticism,
most members of the financial community recognize them as the standards that over
time have proven to be most useful.” (Keiso, et all, 2007, (2007). Financial Accounting,
Ch. 1). Defining standards for financial reporting is critical to creating a financial playing
field that enables us to to evaluate and make sound business decisions as individuals,
companies, a nation, and global ...view middle of the document...

For information to be relevant it must be predictable, have a way to verify it’s
accuracy, past, present, and future, and be reported in a logical timeframe. To en
sure the information is reliable it must be verifiable, transparent, and neutral in it’s
intentions. Lastly, for the information to be useful, it must be understandable. The
people who use the information to make decisions, such as marketing, personnel,
finance, and investor’s have to be be able to understand how the numbers are relevant
to them.
Topic 3: Accrual based and cash based systems
There are two ways to keep records in an accounting system known as
accrual based and cash based accounting. When a company keeps records on cash
based system it records funds when the actual monies are received. With an accrual
based system, funds are recorded when the service is provided. On the accrual system
a company is able to see revenue when the actual service is provided, making it
a more accurate snapshot of the company.
Topic 4: Describe the types of business structures and defining features There are three types of business structures for setting up a company,
sole proprietorships partnerships, and corporations.
The most common form of organization is a sole proprietorship. This is a...

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