Understanding Financial Statements

Introduction, Review of Accounting Process & Financial Statements

Part I
Generally Accepted Accounting Principles (US GAAP)
Generally Accepted Accounting Principles or U.S. GAAP refer to the standard framework of guidelines for financial accounting used in any given jurisdiction; generally know as Accounting Standards. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing, and in the preparation of financial statements (Wikipedia, n.d.). Although quite flexible in guidelines, this framework is based upon certain constraints, principles to address specific necessities. U.S. GAAP is not the written law, they are flexible guidelines. However they are the standards used in the United States. •International Accounting Standards (IFRS)

International Accounting Standards is a set of international accounting standards stating how particular types of transactions and other events should be reported in financial statements (Investopedia, n.d.). IFRS are issued by the International Accounting Standards Board. The International Accounting Standards or the International Financial Reporting Standards are standards and guidelines used by nearly 100 countries. Many of the standards forming part of the IFRS are know by the older name IAS. Many countries use these standards and many do not. The International Accounting Standards Board is a committee that is trying to develop global accounting standards. The IASB has developed procedures that brings transparency, predictability, and consistency of this committee is to create global standards that are transparent, enforceable, understandable, and of high quality. These standards would be a very important step in the accounting world. The use of these standards would provide more informative financial reports with greater clarity and consistency and easily understandable with high quality. •Norwalk Agreement (October 2002)

Norwalk Agreement refers to a Memorandum of Understanding signed in October 2002 between the Financial Accounting Standards Board (FASB), the US GAAP, and the International Accounting Standards Board (IASB). The agreement is so called as it was reached in Norwalk, Connecticut. The Agreement was a significant step towards the US formalizing its commitment to the convergence of US GAAP and International Financial Reporting Standards (Wikipedia, n.d.). The two boards’ goals are to coordinate and design future work to achieve compatibility. They wanted their existing financial reporting standards to be fully compatibility and there be no significant differences between the two set of standards. •Generally Accepted Auditing Standards (GAAS)

Generally Accepted Auditing Standards is a set of systematic guidelines used by auditors when conducting audits on companies' finances, ensuring the accuracy, consistency and verifiability of auditors' actions and reports (Investopedia, n.d.). GAAS has three elements that must be used when audit. They are general standards, standards of field work, and standards of reporting. These three standards have their own set of rules that must be complied with during every audit. •International Auditing and Assurance Standards (IAAS)

The International Auditing and Assurance Standards Board (IAASB) is responsible for creating a set of standards to be followed by countries adopting international accounting standards (IFAC, 2011). The IAAS main focus is to set standards for auditing, review, other assurances and facilitating the convergence of national and international standards. These five terms and concepts are related to one another because they all deal with standards of reporting financial information nationally and internationally. All are trying to converge into one standard or least becomes compatible to one another in order to provide clarity, understandability, enforceability, and high quality reporting standards. Part II

Apple, Inc.
Apple Inc, is an American...

References: IFAC. (2011, September 9). Retrieved September 10, 2011, from http://ifac.org/IAASB/
Investopedia. (n.d.). Retrieved Septmeber 10, 2011, from http://www.investopedia.com/terms/i/ifrs/asp#ixzz1XbKvE5Zt
Investopedia. (n.d.). Retrieved September 10, 2011, from http://www.investopedia.com/terms/g/gaas.asp#ixzz1XbJJsdzl
Kumar, S. (n.d.). Sooperarticles. Retrieved September 11, 2011, from Apple Inc History: http://www.sooperarticles.com/technology-articles/apple-inc-history-3733.html
Swatch Group. (2011, Septmeber 11). Retrieved September 11, 2011, from Swatch Group History: http://www.swatchgroup.com/en/group_profile/history/today
Wikipedia. (n.d.). Retrieved September 10, 2011, from http://en.wikipedia.org/wiki/Generalyy_Accepted_Accounting_Principles
Wikipedia. (n.d.). Retrieved September 10, 2011, from http://en.wikipedia.org/wiki/Norwalk_Agreement
Wikipedia. (n.d.). Retrieved September 11, 2011, from Nikon: http://en.wikipedia.org/wiki/Nikon
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