Basic Accounting Concepts and Business Structures

University of Phoenix
ACC/537
Jeffrey Collins
October 2, 2011

Basic Accounting Concepts and Business Structures
In the current economic condition of the country, a business must follow certain rules and regulations in regard to their Basic Accounting and structure. This would be what is called the Generally Accepted Accounting Principles (GAAP). These principles ensure that the accounting practices of a business are consistent with other businesses. When investors look at the financials for a business, the information needs to be relevant and reliable.
According to the text, GAAP is a common set of standards used in the accounting industry that are a given practice and are accepted as appropriate through universal application (Kieso 2007). There are four organizations that are involved with the development of these GAAP standards. They are the Securities and Exchange Commission (SEC), American Institute of Certified Public Accountants (AICPA), Financial Accounting Standards Board (FASB), and the Government Accounting Standards Board (GASB). This hierarchy is important to maintain the current standards, develop new standards, and uphold these rules and regulations across for boards for reasons of legality and conformity.
The GAAP are used in the industry to make the information on financial statements easier to read and more consistent from business to business. Especially for stock holders or future investors in the firm that may want to research the company and their revenues. In order for this information to be considered effective, there are certain qualities that the information must possess. The information must relevant, reliable, comparable, and consistent. First in regard to relevant, the information must assist in making a difference in a decision. This means the data must be real and up to