Explaining Basic Accounting Concepts and Business Structures
Financial Accounting ACCT 537

Accountants use financial information to communicate how a business is performing. They present this information in financial reports. These reports are created following a common set of standards call General accepted accounting principles (GAAP). These standards and principles are established by the Financial Accounting Standard Board (FASB), the American Institute of certified Public Accountants (AICPA) and the Accounting Principle Board (APB). The SEC Is federal agency established to “help develop and standardize financial information presented to the stockholders” (Kieso 2007 pg. 6). It is responsible to enforce financial principles created. The FASB, the AICPA and the APB are institution formed by the private sector; the SEC believed that standards and principles should be created by the private sectors because it “has the appropriate resources and talent to achieve this daunting task” (Kieso 2007 pg. 6). The FASB is also working on establishing standards, “This standard identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements” (Kieso 2007 pg. 12). It is important that the hierarchy establish by the FASB is use because it gives accountants the ability to deal with any situations that have not been define by the standards and principles and it will also help identify issues that are widely found and need to be address by the board .
Qualities of Financial information
There are certain qualities that information presented in these financial reports must have. The FASB “identifies the qualitative characteristics of accounting information that distinguish better (more useful) information from inferior(less useful) information for decision-purposes” (Kieso 2007 pg. 31). The