...Full Disclosure Paper ACC/421 Full Disclosure Paper Disclosure is information regarding an activity of financial records that creditors, investors, and humans should know what when on in the company or organization regarding the finances increase or decrease. This includes strikes in the company, major fire, theft, a bad product, or a product that is at a high-demand regarding the time of year. Hurricane season in Houston a few years back. The weather reporter states that Houston, Texas is at threat of developing a hurricane, which will hit a specific area. The area has to prepare for the bad storm. The people in the area may have to leave their homes or stay and ride out the storm. The majority the people will go to Lowes or Home Depot to purchase lumber to board up their houses. Some will go to the nearest grocery store to stock up on water, can goods supplies, and items that a person do not have to cook. Others will go the nearest gasoline station to stock up on gas for their cars or generators in case the lights go out. Some go and withdrawal money out of their accounts for the emergency cash. They stated the storm would hit Katy, Texas and head toward Galveston, Texas. This covers a large area. Some people will the full effects of the storm and others just wind. At this time, the stores closed at three o’clock in the afternoon. Gasoline, Wal-Mart, Lowes, and Home Depot sold out of all items need to survive for the storm. Even the fast food...
Words: 760 - Pages: 4
...The most significant case in my life where the disclosure principle played a role was the purchase of our house. Soon after we bought our new property in a well-known suburb of Sofia, problems came to light. When we were buying the house, we knew that it was not in a perfect condition, but we were unaware of many of the problems that we faced later. Because we bought the house from acquaintances, we did not find it necessary to hire a private inspector to do full inspection prior to the purchase. We bought the house in good faith and believed that the good price for it was due to the fact that the previous owner wanted to sell it immediately before going into foreclosure. Once the house was bought, we had to live the consequences of a house with a leak in the plumbing, a leak in the roof and an addition to it build with no permit at all. As a result, we were shouldered with the financial burden of filing a lawsuit to resolve the matter. Unfortunately, the court decided that we were not entitled to collect any damages because the house was purchased without a home inspection and also because there wasn’t an indemnity clause into the sales contract which stated that if there was a problem, it is the seller, rather than us, who suffers financially. Had we had an inspection report, we would have collected damages. Not only did we spend a fortune on the lawsuit, but we were also fined because we were the legal owners of a house with unpermitted work. Moreover, a private inspector...
Words: 506 - Pages: 3
...in question, hence the need for a buyer to feel assured that what they think they are buying is in reality what it should be. In other words, the buyer needs to be assured before making the buying decision that the buyer knows all the relevant facts surrounding a purchase. This is the concept of full disclosure in Generally Accepted Accounting Principles or GAAP. If one looks at the long history of the markets with the repeating boom and bust patterns the world has witnessed, one has to ask why this happens. Many brilliant minds have been doing research into what motivates or de-motivates an investor when it comes to making a purchasing decision. Over time one thing has become clear, full disclosure of any significant enough financial facts that may influence the judgment of an informed reader must be made known to the public. The reason stems from the fact that in order for all markets to operate efficiently, its participants must be able to do the same and that is only possible if companies fully disclose any material events that might affect an informed reader’s decision to buy or sell a stock or other investment. The caveat here is what is material? In some cases, the disclosure of certain items would give away trade secrets or other competitive advantages, thus hindering a company’s future growth, profits, and cash flows. At the other end of the spectrum, if a company fails to report a significant event such as a pending lawsuit and the company has a judgment entered against...
Words: 728 - Pages: 3
...Soon afterwards, Qwest’s stock price had increased significantly, to higher than its original price. It was later discovered that Qwest had not been following the full disclosure principle and were misrepresenting nonrecurring revenue from things such as the sale of capital equipment as “data and internet service revenues”. They also failed to disclose the impact of these nonrecurring revenues. This memo will discuss questions related to the ethics and importance of the full disclosure principle as it relates to this case. 1. The full disclosure principle states that you should include all information that would affect a reader’s understanding of those statements in an entity’s financial statements. This is very important because many of the people who read financial statements in order to invest are not trained accountants. Following the full disclosure principle will allow investors to make informed decisions concerning the company. 2. In this situation, Qwest’s failure to disclose the extent of nonrecurring revenue misled investors into thinking the company was making more money than it actually was. Not only did the company not disclose that a lot of the revenue was nonrecurring, it purposely miscategorized them as “data and internet service revenues”. This information did not follow the full disclosure principle and contributed to investors making poor decisions on the company. 3. This sort of misrepresentation could have been avoided if Qwest...
Words: 616 - Pages: 3
...* Business Entity: assumes that the business is separate from its owners or other businesses. Revenue and expense should be kept separate from personal expenses. * Going Concern: assumes that the business will be in operation indefinitely. This validates the methods of asset capitalization, depreciation, and amortization. Only when liquidation is certain this assumption is not applicable. The business will continue to exist in the unforeseeable future. * Monetary Unit principle: assumes a stable currency is going to be the unit of record. The FASB accepts the nominal value of the US Dollar as the monetary unit of record unadjusted for inflation. * The Time-period principle implies that the economic activities of an enterprise can be divided into artificial time periods. §Principles[edit] * Historical cost principle requires companies to account and report assets & liabilities acquisition costs rather than fair market value . This principle provides information that is reliable (removing opportunity to provide subjective and potentially biased market values), but not very relevant. Thus there is a trend to use fair values. Most debts and securities are now reported at market values. * Revenue recognition principle holds that companies should record revenue when earned but not when received. The flow of cash does not have any bearing on the recognition of revenue. This is the essence of accrual basis accounting. Conversely, however, losses must be recognized...
Words: 522 - Pages: 3
...Running Heading: Full disclosure financial reporting Full disclosure financial reporting Mary Miller ACC/421 Intermediate Financial Accounting 1 University of Phoenix Cathy Reed October 8, 2012 Full disclosure principle in accounting The full disclosure principle in accounting is the action of revealing or reporting every detail of economic transactions, which can affect the financial position of the business and other people who use the financial statements, such as investor, creditors, etc. (What is the full disclosure principle? web -site). Why has disclosure increased substantially in the last ten years? During the last ten years, the full disclosure increase substantially because the FASB has issued several substantial disclosure provisions, such as Complexity of the Business Environment, Necessity for Timely Information, Accounting as a Control and Monitoring Device with the purpose to protect investors and the public security. Need for full disclosure in financial reporting Full disclosure in financial reporting is necessary because this report reflects the financial activities of the business, if this report is not accurate, and if information omitted or altered affects the decisions of the person using or reading the reports. The government created the SEC and FASB; these two organizations set guidelines to ensure that companies and business disclose the information required by the law. A full disclosure of a financial...
Words: 825 - Pages: 4
...Introduction Reporting standards for public and privately held companies, presently up for debate as specific standards of disclosure for each type of business differ. Even though the understanding of full disclosure requirements for the user required by publically held companies, the question of full disclosure for privately held companies still lingers. When it comes to financial reporting and the regulations that govern the reports, all companies should report in the same manner, including total disclosure. This paper will focus on one set of GAAP standards utilized for all companies regardless of whether they are public or private. Throughout this paper, we will explore the aspects of why it would be cost effective for all organizations to report with one GAAP standard, consistency in reporting, and the importance of less confusion (relevance versus reliable) by utilizing one set of standard for both public and private companies, rather than the creation of separate standards. Cost Effectiveness The adoption of one GAAP set of standards for public and private companies still remains supported by several accounting groups. A modification created by the GAAP for private companies, this could lead to changes in the disclosure, presentation, and recognition standards. According to California CPA Education Foundation, “Cost has been one of the main issues for proponents of modifying the standards for private companies.” The panel has discovered that it is very difficult...
Words: 1134 - Pages: 5
...Accounting, Auditing & Accountability Journal Corporate social reporting and reputation risk management Jan Bebbington Carlos Larrinaga Jose M. Moneva Article information: Downloaded by University of Strathclyde At 07:57 17 October 2014 (PT) To cite this document: Jan Bebbington Carlos Larrinaga Jose M. Moneva, (2008),"Corporate social reporting and reputation risk management", Accounting, Auditing & Accountability Journal, Vol. 21 Iss 3 pp. 337 - 361 Permanent link to this document: http://dx.doi.org/10.1108/09513570810863932 Downloaded on: 17 October 2014, At: 07:57 (PT) References: this document contains references to 70 other documents. To copy this document: permissions@emeraldinsight.com The fulltext of this document has been downloaded 10839 times since 2008* Users who downloaded this article also downloaded: Jeffrey Unerman, (2008),"Strategic reputation risk management and corporate social responsibility reporting", Accounting, Auditing & Accountability Journal, Vol. 21 Iss 3 pp. 362-364 Carol A. Adams, (2008),"A commentary on: corporate social responsibility reporting and reputation risk management", Accounting, Auditing & Accountability Journal, Vol. 21 Iss 3 pp. 365-370 Pekka Aula, (2010),"Social media, reputation risk and ambient publicity management", Strategy & Leadership, Vol. 38 Iss 6 pp. 43-49 Access to this document was granted through an Emerald subscription provided by 117974 [] For Authors If you would like to...
Words: 16821 - Pages: 68
...Week four Full Disclosure Paper The full disclosure principle in accounting calls for financial reporting of any financial facts significant enough to influence the judgment of an informed reader. Another definition would be the principle under which all material facts (whose non-disclosure may render a financial statement misleading) must be disclosed. For example if by hiding anything in your cash flow statement would be misleading to a potential investor or partner, then you have not fully disclosed all of your financial data. The full disclosure principle states that any and all information that affects the full understanding of a company's financial statements must be included with the financial statements. Some items may not affect the ledger accounts directly. These would be included in the form of accompanying notes. Examples of such items are outstanding lawsuits, tax disputes, and company takeovers. Disclosure has increased because of the complexity of the business environment, the necessity for timely information, and the desire for more information on the enterprise for control and monitoring purposes (Rutgers, n.d., p. 4) The benefit is that an investor can determine the actual taxes paid by the enterprise. Such a determination is particularly important if the enterprise has substantial fluctuations in its effective tax rate caused by unusual or infrequent transactions. In some cases, companies only have income in a given period because of a...
Words: 752 - Pages: 4
...based on the 2011 printed version of the codification, which is out of date. For the latest, authoritative version of these standards, we recommend you consult https://asc.fasb.org/ which is provided by the Financial Accounting Standards Board. End of Preamble [Not Part of the Accounting Standards Codification] 330 Inventory 10 Overall 00 423 Status 423 General 423 Overview and Background 423 General 423 Objectives 423 General 423 Scope and Scope Exceptions 424 General 424 20 Glossary 424 30 Initial Measurement 425 General 425 Subsequent Measurement 428 General 428 Other Presentation Matters 432 General 432 Disclosure 433 General 433 Implementation Guidance and Illustrations 434 General 434 Status 437 General 437 Subsequent Measurement 437 05 10 15 35 45 50 55 S00 S35 General Disclosure 438 438 Implementation Guidance and Illustrations 438 438 SEC Materials 438 General S99 437 General S55 421 437 General S50 Other Presentation Matters General S45 437 438 905 442 908 Airlines 442 910 Contractors—Construction 442 912 Contractors—Federal Government 442 926 Entertainment—Films 442 930 Extractive Activities—Mining 443 932 Extractive Activities—Oil and Gas 443 976 Real Estate—Retail Land 443 978 Real Estate—Time-Sharing Activities 443 985 422 Agriculture Software 443 10 Overall 330-10-00 Status General 00-1 No updates have been made to this subtopic. 330-10-05 Overview and Background...
Words: 6859 - Pages: 28
...ACC 421 Chapter 5 Wileyplus FOR MORE CLASSES VISIT www.acc421mart.com Keyser Beverage Company reported the following items in the most recent year. Q -2 Ames Company reported 2014 net income of $151,000. During 2014, accounts receivable increased by $13,000 and accounts payable increased by $9,500. Depreciation expense was $44,000. Prepare the cash flows from operating activities section of the statement of cash flows. Q -3 Martinez Corporation engaged in the following cash transactions during 2014. Q-4 The major classifications of activities reported in the statement of cash flows are operating, investing, and financing. Classify each of the transactions listed below as: Q-5 E5-14 http://edugen.wiley.com/edugen/art2/common/pixel.gif The comparative balance sheets of Constantine Cavamanlis Inc. at the beginning and the end of the year 2014 are as follows. Exercise 5-16 (Part Level Submission) A comparative balance sheet for Shabbona Corporation is presented below. Exercise 5-18 (Part Level Submission) The comparative balance sheets of Madrasah Corporation at the beginning and end of the year 2014 appear below. IFRS Practice Question 3 Companies that use IFRS: Entry field with correct answer A company has purchased a tract of land and expects to build a production plant on the land in approximately 5 years. During the 5 years before construction, the land will be idle. Under IFRS, the land should be reported as: -------...
Words: 1095 - Pages: 5
...Sarbanes-Oxley Act Dr. Hassan Ahmed Assistant Professor at Cameron University Abstract The complexity of business environment necessitates a set of required disclosures in a timely fashion. The full disclosure principle under U.S. GAAP is based on a vague definition that cannot be clearly implemented. The cost of disclosures can be significantly large and can have a negative impact on companies’ future earnings (small businesses). The purpose of this article is to examine the disclosure establishment of pre and post Enron, the effect of those disclosures on both corporations and on potential investors and to examine whether financial reporting quality improved with the passage of SOX. A total of 360 audited annual financial statements of the 500 fortune companies were selected. The paper will specifically concentrate disclosures on financial statements, Notes, supplementary (required or voluntary), and other expanded disclosures required by the SEC. The findings will shed light on our understanding about the intended and unintended consequence of SOX. 1.0 Introduction/Literature Review The purpose of SOX Act is to increase corporate transparency and accountability (Friedman, The Business Forum). Though SOX did not address the full disclosure required by the FASB, it simply expanded disclosures by establishing responsibilities. The company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO) have to certify the accuracy of financial transactions and...
Words: 2960 - Pages: 12
...5250 Lankershim Boulevard, North Hollywood, CA 91601 PHONE: (818)299-5100 FAX: (213)251-4928 www. artinstitutes.edu APPLICATION FOR ADMISSIONS Administrative/Enrollment Fee: $100.00 Application Fee: $50.00 }} Applicant Information Applicant Name Butler, Alexandria {{!slc_FullName_es_:Signer1:textfield Maiden/Other Name {{!slc_MaidenName_es_:Signer1:textfield}} Primary/Home Phone 242-364-1175 {{!slc_telephone2_es_:Signer1:textfield }} Mobile Phone 242-465-6469 {{!slc_mobilephone_es_:Signer1:textfield }} Email alexandria_butler@hotmail.com {{!slc_emailaddress1_es_:Signer1:textfield }} Current Address Address 1 Armbrister Steet {{!slc_address1_line1_es_:Signer1:textfield }} State/Province British Columbia {{!slc_address1_stateid_es_:Signer1:textfield }} Address 2 {{!slc_address1_line2_es_:Signer1:textfield }} Zip/Postal Code 00000 {{!slc_address1_postalcode_es_:Signer1:textfield }} City Nassau {{!slc_address1_city_es_:Signer1:textfield }} Country Bahamas {{!slc_address1_countryid_es_:Signer1:textfield }} Permanent Address if different from Current Address Address 1 Armbrister Steet {{!slc_address2_line1_es_:Signer1:textfield }} State/Province British Columbia {{!slc_address2_stateid_es_:Signer1:textfield }} Address 2 {{!slc_address2_line2_es_:Signer1:textfield }} Zip/Postal Code 00000 {{!slc_address2_postalcode_es_:Signer1:textfield }} City Nassau {{!slc_address2_city_es_:Signer1:textfield }} Country Bahamas...
Words: 2464 - Pages: 10
...substantial errors, evaluating the hospital’s accounting system, and making certain that financial statements are being prepared in accordance with generally accepted accounting principles (GAAP). GAAP is a set of guidelines established by the Financial Accounting Standards Board (FASB) to determine the financial position of an organization by providing detailed information such as fiscal returns, balance and outstanding debt of the health care organization. According to Finkler, Kovner, & Jones (2007), “A few of the most common and important GAAP include the following: entity concept, going-concern concept, matching principle and cash versus accrual accounting, cost principle, objective evidence, materiality, consistency and full disclosure” (p. 183). The entity concept is the unit that is being accounted for. Entities can be the whole organization (i.e. nursing home, nursing school, surgical center, etc.) or each individual department within the hospital. When defining the entity two points must be taken into consideration: once defined the resources cannot be mixed with other entities, and the finances should be completely indicative to that specific entity. These two concepts will help keep track of the organization’s finances as they occur during the year. An example of the entity concept would be if someone is examining the finances of a nursing school, and see that the school has ordered supplies from the hospital but has not paid for them yet. The schools...
Words: 2504 - Pages: 11
...regulation is not necessary. Whilst those opposing this view believe that markets are imperfect and as such outside intervention in the form of regulation is required. Both sides hold valid arguments as to why regulation is or is not necessary and this paper shall examine these opposing views before providing an informed opinion. The anti-regulation or free-market approach to accounting is one that has been subscribed to for many years. The main thrust of the American Institute of Accountants in 1934 was anti-regulation, they stressed that, “no attempt [should be made] to restrict the rights of corporations to select detailed methods of accounting deemed by them to be best adapted to the requirements of their business” (May 1934, 80). The argument behind this notion is that the natural market forces or the “invisible hand” of the market will ensure self-regulation. Ross (1979, 379) implies this when he writes, “…disclosure regulations are generally neither required nor desirable, since left on their own, firms will have incentives to report accurately”. The belief that firms have internal incentives to report accurately is the crux of signalling theory. This theory holds that firms can increase their value through full disclosure and firms that fail to disclose will be seen in a negative light. Hence, every firm has reason to engage in financial reporting in order to lower its cost of capital. This incentive makes it a self-regulating system with no need for outside intervention...
Words: 1591 - Pages: 7
