Whether you are building an altogether new bathroom or altering an existing one, designing your bathroom carefully may be more important than you might think. Your bathroom should provide comfort and efficient functionality while occupying the minimum space possible. For this purpose, it is worthwhile to spend some time and effort ... Read more
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Accounting has been defined as (by Professor of Accounting at the University of Michigan William) a pattern of having one basic function: "facilitating the administration of economic activity. This function has two closely related phases: 1) measuring and arraying economic data; and 2) communicating the results of this process to interested parties."
With GAAP, if GAAP is not the principles used for preparing financial statements, then a business needs to make clear which other form of accounting they're used and are bound to avoid using titles in its financial statements that could mislead the person examining it. GAAP's in accounting are not cut and dried. However they're guidelines, and as such are often open to interpretation. They are estimates have to be made at times, and they require good faith efforts towards accuracy. You've surely heard the phrase "creative accounting" and this is when a company pushes the envelope a little (or a lot) to make their business look more profitable than it might actually be. This is also called massaging the numbers. This can get out of control and quickly turn into accounting fraud, which is also called cooking the books. The results of these practices can be devastating and ruin hundreds and thousands of lives, as in the cases of Enron, Rite Aid and others. Personal accounting If you have a checking account, of course you balance it periodically to account for any differences between what's in your statement and what you wrote down for checks and deposits. Many people do it once a month when their statement is mailed to them, but with the advent of online banking, you can do it daily if you're the sort whose banking tends to get away from them. Income - any money you've earned from working or owning assets, unless there are specific exemptions from income tax. A business might also choose not to record asset losses that should be recognized, such as uncollectible accounts receivable, or it might not write down inventory under the lower of cost or market rule. A business might also not record the full amount of the liability for an expense, making that liability understated in the company's balance sheet. Its profit, therefore, would be overstated.
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