Accounting CaseEssay Preview: Accounting CaseReport this essayUse FARS to identify what standard-setters have said as to the superiority of accrual accounting relative to a cash basis. Purpose of accountingAccounting is the process by which companies compile the information needed to determine their financial status. Accounting provides a means to monitor the financial numbers of the company. Accounting “identifies, records, and communicates the economic events of an organization to interested users” (Weygandt, 2008, p. 4). Each company determines which economic events apply to their company. Publicly traded companies must adhere to the Generally Accepted Accounting Procedures established by the Federal Accounting Standards Board. The procedures provide guidance and direction on the proper reporting of company financial information. It is imperative for the accountant to following proper procedures in maintaining the companys financial information and preparing the financial statements.
Financial StatementsAccountants prepare financial statements to provide information to individuals both within and outside the company. “The main purpose of financial accounting is to prepare financial reports that provide information about a firms performance to external parties such as investors, creditors, and tax authorities” (QuickMBA, 2010, para 1). Executives, managers, and employees are also very interested in how successful the company is at meeting its financial objectives. Company personnel may lose their job if the business is not meeting its financial goals. The four basic financial statements used in accounting are the balance sheet, income statement, statement of retained earnings (or owners equity), and cash flow statement. These reports are the culmination of the accountants posting of financial transactions and the information contained in them should be relevant, understandable, accurate, and timely.
The accounting of financial transactions is based on an effective cost-of-living formula, which is also developed in some countries to quantify the cost of living in various countries based on a population of people. Using this money in an effective cost of living formula, the accounting of the financial activities is made more accurate by a reduction in costs which is associated with more efficient management and cost reduction processes. Such an improvement reduces the operational requirements to be applied to financial transactions, which have been made more effective in other industries where this is not necessary for the profit-maximizing nature of business operating practice.
To simplify and support the analysis, we made a variety of tax information and information exchange systems for financial transactions, such as an in-house tax software that records information from all transactions in the company, our personal information provided by the company on our tax returns to the Internal Revenue Service, and other financial information, such as an employee’s compensation, Social Security information, and other personal information. .
Tax Information System
During the past few years, we have developed a tax information system developed specifically to collect and analyze financial information (including income statements and statement of operating income, adjusted EBITDA, and other financial information). According to a recent report by the Accounting and Control Group for Taxpayer Benefit Services and Financial Corporation Information Services that was recently issued, our tax reporting system is designed to accurately report financial information that is collected to the Internal Revenue Service and paid for through tax dollars. This is accomplished by using publicly available information about the financial transactions collected and paid for as well as information available about these accounting measures. In addition, our system is developed and managed using highly sensitive and accurate information that is available in all major media, such as financial statements and reports for our corporate and related tax affairs, and on other companies operating in that area. Some recent tax reports, such as the 2010 Income Tax Results, are more accurate data than recent years.
In order to collect and analyze financial information through our system, we use various tools, including a proprietary system developed under the National Taxpayer Benefit System (NTPA) by the Tax Administration of the United States (T.S.A.), to generate tax information in a high-quality fashion. T.S.A. has its own internal systems that collect financial information from all reports gathered by its tax authorities. T.S.A. has also developed tax reporting software that allows data collected from all reports obtained from T.S.A., and can contribute to the understanding of the effectivenessiveness of our tax reporting system through its own proprietary system.
For most of the past five years, we have provided an information system that facilitates the presentation of financial information to external financial institutions that the U.S. government does business with through financial information technology. We will continue to use information technology, known as financial information technology (FIT), to further our understanding of financial services. We currently also employ an external software system, called OIIS, that provides financial information to external financial institutions. Although FIT was developed through a combination of commercial sources, we have subsequently developed and continue to employ other sources, such as proprietary software, such as IBM’s IBM Financial Database software. When the U.S. Government makes a determination that certain information information is not currently publicly available, it generally applies a certain amount of burden to that information. In our opinion, financial information technology (FIT) is a much more cost-effective choice of information technology than proprietary financial information technology because it will not be subject to higher costs of processing and maintaining information. For our purposes, “filling” the FIT program will not necessarily mean placing an individual in a financial institution who has already taken out a loan or financial institution with a loan. To fulfill this criteria, we require all FIT