Week 1: Overview of Financial Statements - Discussion

Accounting is a way of tracking transactions and organizing them into concise reports to be used by investors, principals of companies, or government agencies to be able to control the financial health of a company, family, or an individual. The book uses the example of a checkbook, which is apropos, as I don't know of anyone who has never "bounced" a check due to careless recording of a transaction. Accounting involves a level of trust, that the reporting is accurate and true. Unfortunately, trust is not enough, and it must be standardized and regulated. Accounting is a way to maximize a finite resource (capital) and allocate it in the most efficient way.
Accounting is the bookkeeping methods involved in making a financial record of business transactions. It is also the preparation of statements concerning the assets, liabilities, and operating results of a business. Accounting is part of every day life for those who pay bills as well. Honestly in the business community there has to be accounting in place to see where the business stands.

What is GAAP? What is the purpose of GAAP? | | | GAAP are the rules that stop accountants from manipulating numbers and formulas to represent whatever it is they want the numbers to say rather than it being an actual reflection of the company's performance. these principles are put in place to prevent the over valuation of company's and overstating of profits that lead to CEO's and other top executives receiving bonuses for goals that were not accomplished. These kind of activities done on a large enough scale can collapse a company. And if enough company's that are large enough to form the impact start to go against the GAAPs it can have a tremendous impact on a countries economy as a whole. Or cripple a industry is the company has enough market share.