What is the Income Statement? The Income Statement, which is sometimes referred to as the Profit and Loss Statement for small businesses, is a document that shows the financial performance of a company over a specific period of time. The Income Statement is used by investors, the company itself, and business analysts. What Is the […]
Qualitative Characteristics of Financial Statements
Financial statements need to be both relevant and faithfully representational. Their utility increases with comparability, verifiability, timeliness, and understandability. Relevance in Financial Statements Financial information is relevant if it can affect financial decision-making. Relevance is affected by its materiality and its nature. Materiality refers to information that if it were omitted or altered would influence […]
These are the organizations that are currently or have previously been responsible for determining exactly what does and does not constitute US GAAP. Body Years Active Notables Securities and Exchange Commission (SEC) 1934 – Present The federal agency responsible for the securities industry. Has prescriptive authority over accounting but largely leaves it to the private […]
There are six steps in the accounting process. Journals In the double-entry accounting system, every transaction must record an equal and opposite effect in at least two separate accounts. One account is debited, and the other account is credited. Debits should therefore always equal credits. Think about balancing the books like you would balancing a […]
The way in which we account for business transactions is based upon the accounting principles known as Generally Accepted Accounting Principles or GAAP. US GAAP is the name of the accounting standard, and IFRS is a different standard used around the world. These business transactions are recorded within the accounting books, and are subsequently summarized […]
