Explaining Basic Accounting Concepts and Business Structures
Explaining Basic Accounting Concepts and Business Structures Laurie D. Melvin ACC/537 – Financial Accounting May 9, 2011 James Neuner, MBA
One of the most important decisions to make when one chooses to start a business is knowing the type of legal organizations to select because the decision affects many aspects of the business. What can be affected are the amount and type of paperwork required, tax payments, possible personal liability one may face, the ability to borrow money, legal obligations, and the business laws that have to be followed. Financial Accounting is a course that introduces basic concepts and methods of corporate financial statements that are most commonly used by internal and external users to students. To explain basic accounting concepts and business structures, this material will identify and describe the sources of generally accepted accounting principles. The source the hierarchy will be identified and the importance of it will be explained. In this material, an accrual-basis accounting system and a cash-basis accounting system will be described as the differences of the two will be explained. Finally, the different types of business structures will be described as each structure features are defined.
Sources of Generally Accepted Accounting Principles
“Generally accepted accounting principles (GAAP) have substantial authoritative support. The AICPA’s [American Institute of Certified Public Accountants] Code of Professional Conduct requires that members prepare financial statements in accordance with GAAP. Specifically, Rule 203 of this Code prohibits a member from expressing an unqualified opinion of financial statements that contain a material departure from generally accepted accounting principles” (Kimmel, Weygandt & Kieso, 2007, p. 12).
Generally accepted accounting principles (GAAP) are an established common set of accepted accounting principles, procedures, and
One of the most important decisions to make when one chooses to start a business is knowing the type of legal organizations to select because the decision affects many aspects of the business. What can be affected are the amount and type of paperwork required, tax payments, possible personal liability one may face, the ability to borrow money, legal obligations, and the business laws that have to be followed. Financial Accounting is a course that introduces basic concepts and methods of corporate financial statements that are most commonly used by internal and external users to students. To explain basic accounting concepts and business structures, this material will identify and describe the sources of generally accepted accounting principles. The source the hierarchy will be identified and the importance of it will be explained. In this material, an accrual-basis accounting system and a cash-basis accounting system will be described as the differences of the two will be explained. Finally, the different types of business structures will be described as each structure features are defined.
Sources of Generally Accepted Accounting Principles
“Generally accepted accounting principles (GAAP) have substantial authoritative support. The AICPA’s [American Institute of Certified Public Accountants] Code of Professional Conduct requires that members prepare financial statements in accordance with GAAP. Specifically, Rule 203 of this Code prohibits a member from expressing an unqualified opinion of financial statements that contain a material departure from generally accepted accounting principles” (Kimmel, Weygandt & Kieso, 2007, p. 12).
Generally accepted accounting principles (GAAP) are an established common set of accepted accounting principles, procedures, and
References: Kiesco, D.E., Weygandt, J.J., & Warfield, T.D. (2007). Intermediate accounting (12th ed.) Retrieved May 7, 2011, from University of Phoenix, Resource, ACC537 – Financial Accounting Web site: https://ecampus.phoenix.edu/content/