Intermediate Accounting Ch.1 Summary

Topics: International Financial Reporting Standards, Financial statements, International Accounting Standards Board Pages: 2 (610 words) Published: October 2, 2012
How does accounting help in the capital allocation process?
If a company's financial performance is measured accurately, fairly, and on a timely basis, the right managers and companies are able to attract investment capital. To provide unreliable and irrelevant information leads to poor capital allocation which adversely affects the securities market. What is the objective of financial reporting?

The objective of general purpose financial reporting is to provide financial information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors in making decisions in their capacity as capital providers. What is meant by general-purpose financial statements?

General purpose financial statements provide financial reporting information to a wide variety of users. To be cost effective in providing this information, general purpose financial statements provide at the least cost the most useful information possible. What is the benefits of a single set of high-quality accounting standards? A single set of high quality accounting standards ensures adequate comparability. Investors are able to make better investment decisions if they receive financial information from a U.S. company that is comparable to an international competitor. Who are two key international players in the development of international accounting standards? Explain their role. The two organizations involved in international standard-setting are IOSCO (International Organi-zation of Securities Commissions) and the IASB (International Accounting Standards Board.) The IOSCO does not set accounting standards, but ensures that the global markets can operate in an efficient and effective manner. Conversely, the IASB's mission is to develop a single set of high quality, understandable and international financial reporting standards (IFRSs) for general purpose financial statements. What are some of the major challenges facing the accounting profession?...
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