An examination of public accounting and financial reporting

Structure[ edit ] The FRC is a company limited by guaranteepartly funded by government and the industry and its board of directors is appointed by the Secretary of State for Business, Energy and Industrial Strategy. It and its subsidiaries play crucial roles in the oversight and development of corporate governance standards in the UK and the Republic of Ireland, such as the UK Corporate Governance Code and standards for the accounting industry. The FRC board is supported by three committees:

An examination of public accounting and financial reporting

Accounting is the process of systematically recording, measuring, and communicating information about financial transactions. How It Works At the heart of accounting is the double-entry bookkeeping method.

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This involves making at least two recording entries for every transaction: The method helps prevent errors because the sum of the debits should equal the sum of the credits. The three major financial statements produced by accounting are the income statementthe balance sheetand the cash flow statement.

Accounting can be done on a cash basis cash accounting or on an accrual basis accrual accounting. Cash accounting records cash inflows and outflows in the period in which they occur. Accrual accounting records income and expenses in the period to which they are attributable rather than when cash payments come and go.

For example, a check written in April for March's utilities would appear as a March expense under the accrual method and as an April expense under the cash method. There are two general kinds of accounting.

Financial accounting is the recording and communication of economic information in accordance with Generally Accepted Accounting Principles GAAP and is primarily for external users. Managerial accounting is the recording and communication of economic information that may or may not be in accordance with GAAP and is for internal users.

Other accounting specialty areas exist, such as tax accounting, oil and gas accounting, or forensic accounting. There are two kinds of users of accounting information: Internal users are usually company managers who use accounting information to decide how to plan and control operations on a daily and long-term basis.

External users are existing or potential investors, creditors, analystsfinancial advisersregulatory authorities, unions, and the general public. They use accounting information to make a myriad of decisions about whether to buy, hold, sell, lend, continue a relationship, or make an agreement.

Why It Matters Accounting is tremendously important because it is the language of business, and it is at the root of making informed business decisions. Without accounting, managers would not know which products were successful, which business decisions were the right ones, and whether the company was earning money.

It would not know how much to pay in taxeswhether to lease or buy an assetor whether to merge with another company. In short, accounting doesn't just count the beans, it measures a company's success at meeting its goals and it helps investors understand how efficiently their economic resources are being used.

This is why companies must be proficient in accounting in order to make good decisions.

An examination of public accounting and financial reporting

Accounting can be controversial, in that accounting rules and methods are sometimes subject to interpretation or can appear to distort a company's true performance.

This is another important reason that effective leaders and managers must thoroughly understand the accounting impact of their decisions.page 1 of 24 may professional examination public sector accounting & finance () examiner’s report, questions and marking scheme examiner’s report.

Accounting | Definition of Accounting by Merriam-Webster

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AGA - Examination Two