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Financial Accounting and Reporting
• Financial reporting is a means of communicating financial information to users
• For-profit entity:
o Main objective – profit & the bottom line o Purpose of the financial reporting – investment, credit, and similar decisions o Market and revenues – the level of economic activity • State and local government: o Main objective – services to constituents o Purpose of the financial reporting – accountability to the constitutions, legislative and oversight bodies o Budget and expenditures – the level of services/activity
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History of GAAP • The generally accepted accounting principles (GAAP) are a set of accounting rules, standards, and procedures issued. • Security and Exchange Commission (SEC) – 1934 • American Institute of Certified Public Accountants (AICPA) - 1887 o Committee on Accounting Procedure (CAP) – 1939 to 1959 o Accounting Principles Board (APB) – 1959 to 1973
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