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GAAP PowerPoint #1.  Generally Accepted Accounting Principles  Defined as the set of accepted industry rules, practices and guidelines for financial.

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Presentation on theme: "GAAP PowerPoint #1.  Generally Accepted Accounting Principles  Defined as the set of accepted industry rules, practices and guidelines for financial."— Presentation transcript:

1 GAAP PowerPoint #1

2  Generally Accepted Accounting Principles  Defined as the set of accepted industry rules, practices and guidelines for financial accounting  Includes the standards, conventions, and rules accountants follow in recording and summarizing transactions, and in the preparation of financial statements

3  AICPA  FASB  SEC ◦ Define: Security ◦ Securities Act of 1933 ◦ Securities Act of 1934  GASB

4  American Institute of Certified Public Accountants (CPA)  Founded in 1887  Sets ethical standards for the CPA profession  Sets U.S. auditing and GAAP standards  Develops and grades the Uniform CPA Examination 

5  Financial Accounting Standards Board  Established in 1973  Establishes and improves standards of financial accounting by non- governmental entities (GAAP) 

6  Securities and Exchange Commission  Created by the Securities Act of 1933 and the Securities and Exchange Act of 1934  Holds the primary responsibility for: ◦ Enforcing federal securities laws ◦ Regulating the securities industry ◦ Regulating the stock market and ◦ Preventing corporate abuse of investors

7  Enforcement authority granted by Congress  Bring civil enforcement actions against individuals and companies who: ◦ Commit accounting fraud ◦ Provide false information ◦ Engage in insider trading ◦ Violate securities laws  Bring criminal enforcement actions to prosecute individuals and companies for criminal offenses

8  Maintains fair, orderly and efficient security markets  Ensures that securities industry professionals deal fairly with their customers  Ensures that corporations make all material information about themselves public  Facilitates capital formation for corporations 

9  notes  stock  treasury stock  security future  bond  debenture  certificate of interest  participation in any profit-sharing agreement

10  Referred to as the Truth in Securities Law  Two basic objectives: ◦ Requires that investors receive financial/significant information concerning securities offered for public sale ◦ Prohibits deceit, misrepresentations, and fraud in the sale of securities

11  Empowers the SEC with broad authority over the securities industry  Includes the power to register, regulate, and oversee ◦ Brokerage firms ◦ Transfer agents ◦ Clearing agencies ◦ Self-regulatory organizations  New York Stock Exchange  American Stock Exchange  NASDAQ  Empowers SEC to require periodic reporting by companies with publicly traded securities (GAAP)

12  Governmental Accounting Standards Board  Established in 1984  To establish and improve standards of state and local governmental accounting and financial reporting (GAAP) 

13  What is meant by GAAP?  Why should all companies follow GAAP in reporting to external users of financial information?  Explain the roles of each of the governing bodies in the setting of accounting standards.


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