Basic Accounting

Explaining Basic Accounting Concepts and Business Structures
Tracy Duran
January 12, 2015
Rebecca Kime

Explaining Basic Accounting Concepts and Business Structures
      In the field of accounting there have been general accepted accounting principles that on a whole have been accepted and are used universally by everyone (Kieso, Warfield, & Weygandt, 2007).   The reason behind these principles is so each company doesn't have their   set of values (Kieso, Warfield, & Weygandt, 2007).   If every company decided to set their   principles, it would be impossible for an individual, to know every different set of standards each company had for reading their financial statements (Kieso, Warfield, & Weygandt, 2007).   This would also make it impossible for each group to prepare their financial statements and compare them to other companies (Kieso, Warfield, & Weygandt, 2007).   In order for this not to happen the GAAP has a hierarchy who design these standards to follow so this confession will not occur (Kieso, Warfield, & Weygandt, 2007).
      Four different committees reinforce the GAAP, and each committee has its   particular part they maintain (Kieso, Warfield, & Weygandt, 2007).   The Securities and Exchange Commission (SEC) is a federal branch that enforces the GAAP to any such company that falls under their jurisdiction (Kieso, Warfield, & Weygandt, 2007).   The American Institute of Certified Public Accountants (AICPA) has a committee that issues certain principles and procedures for CPA’s and accountants to follow (Kieso, Warfield, & Weygandt, 2007).   The Financial Accounting Standards Board (FASB) helps to improve and report these standards about accounting to the public (Kieso, Warfield, & Weygandt, 2007).   The FASB is known as the hierarchy for setting the GAAP to follow, and this is important because there is one set of universally principles every company follows, making everyone’s financial statements comparable (Kieso, Warfield, & Weygandt, 2007)....