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Introduction, Review of Accounting Process and Financial Statements

In: Business and Management

Submitted By jmarone1969
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Touro University International

ACC403 Principles of Accounting

Module 1 Case Assignment

Dr. Paul Watkins

Introduction, Review of Accounting Process and Financial Statements

According to about.com (http://about.com), Generally Accepted Accounting Principles (GAAP) refers to a set of extensively customary bookkeeping principles, established by the Financial Accounting Standards Board (FASB) (http://www.fasb.org/), and used to regulate fiscal accounting of public corporations. The FASB was formed in 1973, replacing the Accounting Principles Board and the Committee on Accounting Procedure of the American Institute of Certified Public Accountants before it. The FASB is a private body whose operation is to “institute and advance values of economic accounting and reporting for the supervision and instruction of the public, the FASB circulate GAAP. GAAP is important in accounting because it is the set standard for companies to follow.

In its simplest terms, current assets are what you own and liabilities are what you owe. Current assets are those assets that can readily be converted to cash. Bank accounts are of course most readily convertible, but any assets that can be converted to cash within a short time are current assets. Current liabilities are those liabilities which have to be paid off within a short time. Equity is what is left over. It is your net worth.

Non-current items are broken down into two categories non current assets and non-current liabilities. Non-current assets are further divided into fixed assets and other assets. Non-current liabilities are long- and medium-term liabilities that are due in more than one year's time. They are distinguished from current liabilities in a business's balance sheet in order to distinguish the periods within which its liabilities fall due for payment, but are still recorded as part

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