fsa
TRANSCRIPT
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Financial
statement
analysis
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Accounting principles, conventions & concepts
Asma farooq.
Mustajab zahra.
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Gaap stands for generally accepted Accounting principles.
Gaap are some type of rules & accountant must be familiar with acceptable reference
sources in order to decide whether any particular accounting principles has
substantial authoritative support.
Development of GAAP
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In general securities of exchange 1934 was intended to regulate securities trading on the
national exchanges ,& it was under this authority that the SEC was created.SEC has
authority to determine GAAP & to regulate the accounting profession.
The formal process of developing accounting principles that exists today in US began with
the securities act of 1933 & 1934.The securities act of 1933 was designed to protect investors from abuses in financial reporting
that developed during the 1920s.
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ACIPA is stands for American institute of
certified public accountants.
ACIPA is a professional accounting organization
whose members are certified public
accountants(CPAs).during 1930 the ACIPA has a
special committee working with the New
York stock exchange on matter of common
exchange.
Two standing committee was established in 1939 “Accounting procedures
& committee on accounting terminology ” these committees were
active from 1939 to 1959 an issued 51 accounting
research bulletins.
ACIPA
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In 1959, the ACIPA replaced the two committees with the Accounting Principles
Board(APB) & accounting research division.
The combination of APB & accounting research division
lasted from 1959 to 1973.accounting research division
issued 14 A/C research studies. APB issued 31 opinions (APBO)
& 4 statements (APBOs)
APBO is part of GAAP. In 1972, a special study group of
the ACIPA recommended another approach --- the
establishment of the FASB.ACIPA adopted these
recommendations in 1973.
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FASB stands for financial accounting standard boards, Independent of ACIPA , is governed by the FAF.
FAF consists of 8 private industry members .The public members consists of five at-large members & these states & local Govt members.
FASAC is responsible for advising the FASB.
FASB
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1. •Statement of Financial Accounting Standards.(SFAS)
2. •Interpretations.
3. •Technical bulletins.
4. •Statement of Financial Accounting Concepts.(SFAC)
Types : There are 4 types of pronouncements:
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Business entity
Going concern
Time period
Monetary unit
Historical cost
Matching concept
Full disclosure
Cash basis
Accrual basis
Realization
Industry practice
Traditional assumptions of accounting model
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business entity: •The entity for which the financial statements are prepared is separate & distinct from the owners of the entity.
Going concern: •include the infinite time period…provides perspective on future of entity.
Time period: •discuss the time period in starting the period…
Monetary unit: •Yard, a gallon & money of the possible standards of measure…
Historical cost: •The price of asset in the balance sheet is based on its original cost when acquired by the company.
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cash basis:
Records the transaction when cash receive & payed…
Accrual basis:• I
t record when transaction are occurred.
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AnyQuestio
n
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The
end.
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