Chapter 15 Accounting in a Global Market QUESTIONS 1. Foreign currency exchange rates are used to express transactions in local currency in terms of U.S. dollars and vice versa. For example‚ if the exchange rate is $1 = 1.65 DM (Deutsche mark)‚ and if one wishes to change 100 U.S. dollars into Deutsche marks‚ one will receive $100 ( 1.65 = 165 DM‚ and if one wishes to change 100 DM to U.S. dollars‚ one will receive 100 DM/1.65 = $60.61. 2. A foreign currency transaction occurs when a transaction
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language of business. As such‚ accountants collect and communicate economic information about business enterprises or other entities to a wide variety of persons. To be useful‚ financial statements must be clearly understandable and comparable so that users may compare the performance of one business with the performance of the same business for a prior period or with the performance of another similar business. Therefore‚ all general purpose financial statements should be prepared in accordance with
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communication of financial information about (2) Economic entities to (3) Interested parties. Financial accounting is the process that culminates in the preparation of financial reports on the enterprise for use by both internal and external parties. Users of these financial reports include investors‚ creditors‚ managers‚ unions‚ and government agencies. Managerial accounting is the process of identifying‚ measuring‚ analyzing‚ and communicating financial information needed by management to plan
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History of Establishment of GAAP. Discuss CAP‚ APB‚ FASB‚ and related pronouncements. (AICPA adapted). Accounting Principles. Define accounting principles. Discuss sources of GAAP. (CMA adapted). Standard Setting. Describe why there is political action and social involvement in the standard setting process. Organization of the FASB. Summarize the structure of the FASB‚ its documents (GAAP pronouncements)‚ and its operating procedures. GAAP and the AICPA. Summarize the GAAP-related documents published
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Chapter 1 BE1-1 Briefly define accounting. What are the three main characteristics of accounting? Is accounting static or dynamic? Accounting collects‚ analyzes‚ measures and records financial information about an organization and reports that information to stakeholders and decision makers. Accounting has 3 essential characteristics. Accounting is the (1) identification‚ measurement‚ and communication of financial information about economic entities to interested persons. Like social
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failed to record the revenue‚ thus it is considered departure from GAAP. If this departure is material and pervasive to financial statements‚ the auditor should issue adverse opinion. If this failure to record the revenue is material but not pervasive‚ the auditor can issue qualified opinion. If this departure is immaterial‚ unqualified opinion can be expressed. c. Not capitalization of leases is considered as departure from GAAP. If the amounts of capitalization are material but not pervasive to
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Advantages…………………………………………………………………………4 2.2. Disadvantages………………………………………………………………………………..5 3. Similarities and Differences between IFRS and U.S.GAAP......6 3.1. Similarities between IFRS and U.S. GAAP.......................................7 3.2. Differences between IFRS and U.S. GAAP……………………………………..10 4. International Accounting Harmonization…………………………...11 4.1. Why International Accounting Harmonization………………11 5. Adoption of IFRS around the world…………………………………….12 6. Progress
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ACCOUNTING CONCEPT AND CONVENTIONS In drawing up accounting statements‚ whether they are external "financial accounts" or internally-focused "management accounts"‚ a clear objective has to be that the accounts fairly reflect the true "substance" of the business and the results of its operation. The theory of accounting has‚ therefore‚ developed the concept of a "true and fair view". The true and fair view is applied in ensuring and assessing whether accounts do indeed portray accurately the business
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U.S. GAAP vs. IFRS Financial Ratios Impact : International Financial Reporting Standards (IFRS) and Generally Acceptable Accounting Principles (US GAAP) are standard-setting bodies that were established with the purpose of developing high quality‚ understandable‚ transparent and comparable financial information that could be useful to the financial statement users. The conceptual basis and many general accounting principles are very similar under IFRS and US GAAP. However
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objectives and main users of financial accounting information in accordance with the international framework of the International Accounting Standards Board: • Describe the scope and objectives‚ i.e. the provision of useful information for people about their resources. This could include cost of assets‚ loans outstanding‚ income received‚ expenses consumed‚ etc. Identify the main users of accounting information in accordance with the IASB’s framework document. The needs of users will vary depending
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