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Fnancial Statements

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Financial Statements

Part I: 1) Generally Accepted Accounting Principles (US GAAP) – The Generally Accepted Accounting Principles (GAAP) are accounting standards or principles that are used in financial accounting information that is historical in nature. It is used to conduct comparisons between companies.(Edwards & Hermanson, 2007) The GAAP is important because it allows companies to provide accurate and consistent financial statement information to investors, creditors and stakeholders of a company. (Sarimi)

2) International Accounting Standards (IFRS) - The International Financial Reporting Standards (IFRS) is a basis for U.S. financial reporting. The Securities and Exchange Commission (SEC) has been taking steps to set a date to allow U.S. public companies to use IFRS, and perhaps make its adoption mandatory. (Edwards & Hermanson, 2007) The IFRS has the potential to benefit users worldwide as well as other users of financial statements by reducing the cost of investments and increasing the quality of the information provided. Investors may also be more willing to provide financing with greater transparency among different firms' financial statements. (Dumont, 2012)

3) Securities and Exchange Commission (SEC) - The SEC is a government agency that administers important acts dealing with the interstate sale of stocks and bonds. It has the authority to prescribe accounting and reporting practices for companies under its jurisdiction. The SEC has adopted a policy of working closely with the accounting profession, especially the FASB, in the development of accounting standards. (Edwards & Hermanson, 2007) The SEC is important because in addition to regulation and protection, it also monitors the corporate takeovers in the U.S.

4) Annual report - Annual reports are formal financial statements that are published and sent to the

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