Gaap Model Essay

1713 words - 7 pages

Accounting has been around for thousands of years and it still isn’t perfect, so it continuously evolves towards standardizing and simplifying methods for all users.
Some argue that accounting developed purely in response to the needs of the time brought about by changes in the environment and societal demands. (John R. Alexander 2002) So, whatever “time” that was morphed into all the time didn’t it!
Furthermore, It would be easy to become lost in the sauce with principles, financial jargon, and the many details within financial statements, however here we will break it all down in a natural fashion.
The accounting system for setting up, maintaining and auditing ...view middle of the document...

S. dollars for acknowledging monetary values. For Samsung this became a chore, because even though the website and statements were in English, the numbers were all won (₩).
Economic entity assumption in accounting must not include owner assets or liabilities within financial statements. In addition, each entity must be separately maintained. This ultimately saves the owner from losing everything in a downward event.
Full disclosure principles are usually found within the footnotes of a financial statement to describe the “fine print” explaining policies in which the company performs record keeping and reporting such business transactions.
Accrual basis accounting records transaction at the time they occur which keeps financial statements up to the minute rather than deferring transactions for a later date. An advantage to this is that it makes it easier to determine the overall financial health of a company. This would alleviate any required calculations of future or past services.
Accrual basis accounting goes hand in hand with revenue recognition principle where the transaction or revenue is recognized when the merchandise exchange is made.
Matching principle recognizes profits as the revenue is honored. This is relevant to revenue recognition and accrual basis (above) in that when the goods are recorded from an asset to an expense at the point of the goods exchanging ownership. Not when the payment is received.
Cost principle shows assets recorded at cost, which is arguable when referencing appreciation. In example would a be an office building that was purchased in 1940, would be worth much more in 2011 than the original purchase price. However, with cost principle we only record the actual purchase price regardless of its current value.
Going concern principle is broken down in to two categories; short-term (current) and long term assets and liabilities. Both teeter on time, one year or less than one year, with less than one year being short term and vice versa.
Relevance, reliability and consistency. Relevance refers to a company’s past performance, present condition and future outlook so that informed decision can be made in a timely manner. (Cliffs Notes) Reliability is verifiable data. Consistent information shows that each statement mirrors that last, there is a need for dependability when going from one report to the next.
Principle of conservatism is using a more pessimistic approach in judgment calls. For example, you have received comparable estimates from two companies and must choose one moderately.
Lastly, materiality principle within the GAAP model does not implement the provisions of an accounting standard if an item is immaterial. This last principle is dependent on the size of the business. Larger businesses are able to ignore petty expenditures such as a desk chair, where a smaller family business cannot. These principles are made with experienced and sound decisions where values are often...

Other Essays Like Gaap Model

Hemo Tech Essay

710 words - 3 pages Hemo Tech Case Study Liliana Buzoianu Ayers Keiser University ACG5075 Dr. Bedell May 26, 2013 Intro Bringing a new technology on the medical equipment market, Hemo Tech becomes known on the market by being the only company that is selling a new technology. The new technology is known as BIO-07, new medical equipment that’s innovating the previous model BIO-02 by improving considerably the blood collection process. Hemo Tech signed

A Call for a New Report

3087 words - 13 pages , & McCracken, 2008). The audit report is often called a “pass/fail” model in that the auditor’s opinion is either that the company’s financial statements are fairly presented (pass) or not (fail) (Ciesielski & Weirich, 2012). The report basically indicates what the auditor examined, how it was examined, and the auditor’s opinion on the conformance with GAAP. The ideal scenario is that the users study the financial statements themselves with

Corporate Governance Report

890 words - 4 pages being used to test accounting risk within Northwest Pipe Company is the Beneish Model (M-Score). This model determines the probability of earnings manipulation within a firm. More specifically, the model uses a combination of predictive variables to assess whether or not a firm is adhering to GAAP. The variables being used within this model include days’ sales in receivables index, gross margin index, asset quality index, depreciation index

Acct 210 Midterm

2608 words - 11 pages turnover must rely on the valuation metrics recorded under GAAP 43. Record the following adjusting entries (record only the adjustment, not the original entry to purchase, etc. – again record in proper journal entry form. Also be sure to put the debit side and the credit side in proper form (i.e. debit listed first and not indented, credit listed 2nd and indented; do not draw T-accounts or do not use the horizontal model format): a. Your

Iasb, Uk Gaap and Ifrs

2437 words - 10 pages “The establishment of a comprehensive and effective standard for revenue recognition is a major challenge for accounting regulators.” Discuss the above statement in the light of accounting issues and problems in this area, previous attempts at regulation in UK GAAP and IFRS (IAS) and work currently underway by the IASB. Deadline: Tuesday 8th December, 2009 Seminar Tutor: Word count (excluding title and references): 2378 Revenue

'Accounting Standard's

4411 words - 18 pages Definition of 'Accounting Standard's An accounting standard is a guideline for financial accounting, such as how a firm prepares and presents its business income and expense, assets and liabilities. The Generally Accepted Accounting Principles is comprised of a large group of individual accounting standards. GAAP standards apply to financial reporting in the United States and may be eventually phased out in favor of the International Accounting

Ratios, Vertical, and Horizontal Analysis

827 words - 4 pages ensuring proper revenue recognition.” Internal Controls are required by law, and when kept by a company it increases the likelihood that goals are met. There are two primary internal controls, which are the COSO model, and the COCO model. The COCO model is the most popular, and is based on a model published by the Committee of Sponsoring Organization of the Treadway Commission in 1992. It was created to help businesses provide assurance

Ias vs Gaap

4092 words - 17 pages Items | IAS | U.K. GAAP | U.S. GAAP | Revenue | IAS 18 Revenue Recognition Revenue is recognized for the sale of goods, rendering services and for interest, royalties and dividends It is measured at the fair value of the consideration received or receivable and it is recognized when conditions are met (depending on the nature of the revenue) Guidance is also given to this standard on when to recognize revenue(depending on

Fair Value

546 words - 3 pages (“systemic risk”). While similar criticisms have been made periodically for as long as fair values have been used in GAAP (well over 50 years), the recent volume and political salience2 of these criticisms is ironic given that in September 2006 the FASB issued FAS 157, Fair Value Measurements. This standard contains considerably more comprehensive fair value measurement guidance than previously existed. It almost seems that the credit

Goldman Sach

1942 words - 8 pages future outcomes based on emerging markets. The paper of itself does not issue a company strategy on how to use the information found. In this paper I will use scenarios the company presents and determine how Goldman Sachs should invest 5 million dollars recently received to maximize its wealth. In the overview Goldman Sachs mentioned: That they developed a model of discount rate determination that permits the company to recreate discount rate

International Financial Reporting Standards (Ifrs) in Indian Context

1838 words - 8 pages standards remain sensitive to local conditions, including the legal and economic environment. Accordingly, AS issued by ICAI depart from corresponding IFRS in order to ensure consistency with legal, regulatory and economic environment of India. As the world continues to globalize, discussion on convergence of Indian GAAP with IFRS has increased significantly. A few developments are set forth hereunder • Formation of IFRS Task Force by the Council

Related Papers

Accounting Essay

1018 words - 5 pages iPhone at Apple, Inc.: The case provides students with an understanding of the criteria for revenue recognition and the role of accrual accounting in reflecting timing differences between cash receipts and product/service delivery, especially in situations where there are multiple deliverables. The case also enables students to reflect on (a) the use of supplementary non-GAAP disclosures, (b) the impact of accounting on firm value and (c

Property Plant And Equipment Ifrs

3115 words - 13 pages Property, plant and equipment |Level |[pic] |Typical coverage of US GAAP: | |US GAAP |Replace slides 2 and|Definition | | |3 with your own |Acquisition of PP&E

Rules Based Of Principle Based Accounting Frameworks

3350 words - 14 pages of IFRS is that countries are experiencing significant difficulties in handing over power to an international body. This is particularly the case for countries that follow the global GAAP as the difference in measurement and terminology between the two standards is significant (Irvine & Lucas. 2006). In addition, there is the challenge of translating the standards into clear and concise reporting model that can be understood in different

Financial Statement Analysis

871 words - 4 pages Course Goals and Learning Objectives: The goal of this course is to provide students a practitioner’s perspective on financial statement analysis. The course will emphasize thinking beyond the text and will focus to how to critically examine financial statement information and management representations. The course will primarily focus on financial statements prepared in accordance with US GAAP, however differences between US GAAP and IFRS will