Finances CaseEssay Preview: Finances CaseReport this essayFASB PaperThe idea of keeping good records of finances, property, or materials date back to just some of the earliest societies and branches over various different civilizations and generations. The history and evolution of accounting is strictly routed through that of society. Thus, each society has their specific need of accounting, which closely indicates the methods and structure of the system followed. Ultimately, due to the development of corporate business, there is a need to establish a formal method which arose from the modern accounting system which is active today. Over time, the Financial Accounting Standards Board or FASB became relative to accounting standards. However, the FASB is not the primary group which has the responsibility to declare or clarify accounting standards; coincidentally, the confusion leads to attempting to comply with generally accepted accounting principles.
Nevertheless, in order to simplify the process and bring order, the FASB established an Accounting Standards Codification. The FASB ASC is an overhaul of accounting and reporting standards designed to simplify user access to select US authorities which are generally accepted accounting principles (GAAP). Furthermore, they are provided with the authoritative literature with a typically organized structure. In summary, the FASB ASC has an authoritative and complete source on GAAP.
The purpose of ASC is basically to simplify the user access to all authoritative US GAAPs within one spot. Furthermore, the ASC makes an effort to provide updated information on the GAAP. Through a simplified and updated research system, the FASB ASC is able to improve their accuracy with accounting practices.
The accounting standards codification in itself are composed of nine sections, including accounting principles, presentation, assets, liabilities, equity, revenue, expenses, broad transactions, and industry. Primarily, accounting principles were generally accepted as an overview of the GAAP. Second of all, the presentation presented itself as a section which regards to the general presentation of financial statements. Finally, the assets section, which normally covers cash, cash equivalents, inventory, and various other assets. Basically, each of the sections gave the audience guidance on the related field of accounting. The final two sections include a broad transaction and industry, which is where the topics primarily
tend to overlap. The accounting standards codification was first put in effect in 2001 and the industry is one of the four areas where GAAP’s definition of ‘financial statement accounting’ and ‘special reports’ differs significantly. With our current understanding on the various aspects of accounting, the accounting standard could be considered as one of more than twenty independent areas with the common approach of focusing on three separate areas.[2] Accounting requirements vary greatly in the six major industries that the GAAP considers to be the most important areas for its “best practices”. The GAAP describes the five following categories of accounting requirements for a business as follows:
S-2 (2.2) (1) Management
S-1 (2)
– (2) Management and employees
S-2 (3)
– (3) Management and employees
S-3 (4)
– (4) Management and employees
S-2 (5)
– (5) Management and employees
C-2
– (5) – (3) Marketing, operations, advertising and financial services
S-2 (6)
– (6) (3) Special accounts subject to a significant cost risk in evaluating, and to assess or recommending policies and procedures or practices to best achieve or achieve significant value for the Business[3].
A portion of the sections dealing with the handling and analysis of accounting require management to provide certain financial and accounting information to investors, so you will want to examine this section in detail as part of your preparation for acquiring or selling an enterprise. However, the GAAP will generally note that the specific amount of the special accounts may require some form of management responsibility as described above. The GAAP notes:
A. It is customary to require that the management person responsible for any of the special accounts hold regular reports on a regular basis to advise on relevant information that is not required in the standard of management responsibility, whether or not he or she represents to the Financial Manager what the relevant documents are, which record activities of the Special Accounts, or to provide specific financial and accounting information to a specific customer or a specific member of the business.
B. Generally, the management person responsible for a special account held regular reports on a daily basis to advise on pertinent information that is not required in the standard of management responsibility, whether or not he or she represents to the Financial Manager what the relevant documents are, which record activities of the Special Accounts, or to provide specific accounting information to a specific customer or a specific member of the business.
C. Generally, the Management person responsible for a special account held periodic reports on a regularly-use basis to advise on certain information that is not required in the standard of management responsibility, whether or not he or she represents to the Financial Manager what the relevant documents are, which record activities of the Special Accounts, or to provide specific financial and accounting information