Touro University International Essays (436 words) -

Touro University International James L. White ACC 501 Module 1, Case Assignment Dr. Paul R. Watkins INTRODUCTION The purpose of this report is to search the course background information, the Internet and/or the Cyber Library. Discuss each of the following terms; Generally Accepted Accounting Principles, Historical Cost, Accrual Basis vs. Cash Basis Accounting, Current Assets and Liabilities vs. Non-Current Items. My discussion will expand on the definition as given in the course terms and explain why this concept is important to financial statements. I will then describe the general organization of Ford Motor Company, Microsoft, and ExxonMobil by looking at three sets of their financial statements (Balance Sheet, Income Statement, and Statement of Cash Flows). I will make one prediction about each company's from that company's financial statements and Reach one additional conclusion about each company from the additional information I find in the annual report. By discussing these topics, I hope to offer some knowledge on these accounting terms and the three companies listed above. I will conclude this report with a brief summary of the entire analysis, highlighting some of the most significant parts that the report contains. terms Wikipedia defines Generally Accepted Accounting Principles (GAAP) as, "the standard framework of guidelines for financial accounting. It includes the standards, conventions, and rules accountants follow in recording and summarizing transactions and in the preparation of financial statements". (Wikipedia, 2006) Every country has their own version of GAAP with the standards being set by their national governing body. Wikipedia defines the United States version as, "the accounting rules used to prepare financial statements for publicly traded companies and many private companies in the United States". (Wikipedia, 2006) GAAP is not an unchanging set of rules. It is a guideline of objectives and conventions that have evolved over time to oversee how financial statements are arranged and presented. Qualified public accountants customarily audit companies to determine if their financial statements are in compliance with GAAP. GAAP has four basic assumptions (Economic Entity Assumption, Going Concern Assumption, Monetary Unit Assumption, and Periodic Reporting Assumption), four basic principles (historical cost principle, revenue recognition principle, matching principle and full disclosure principle) and four basic constraints (Cost-benefit relationship, Materiality, Industry practices and Conservatism). Organizations such as the; United States Securities and Exchange Commission, American Institute of Certified Public Accountants, Financial Accounting Standards Board, Government Accounting Standards Board , American Accounting Association, Institute of Management Accountants, and the Financial Executives Institute, all influence the development of GAAP in the United States. CONCLUSION WORKS CITED 1. Generally Accepted Accounting Principles (USA): Retrieved October 12, 2006, from http://en.wikipedia.org/wiki/US_GAAP 2. Generally Accepted Accounting Principles, Retrieved October 12, 2006, from http://en.wikipedia.org/wiki/GAAP 3. "What Are Generally Accepted Accounting Principles?" from ALLBusiness . Retrieved October 13, 2006, from www.allbusiness.com