Читать книгу How to Read a Financial Report - John A. Tracy - Страница 11

Over the past century (and longer) the accounting profession has developed. One of its main functions is to prepare and report business financial statements. A primary goal of the accounting profession has been to develop and enforce accounting and financial reporting standards that apply to all businesses. In other words, there is an authoritative “rule book” that businesses should obey in accounting for profit and in reporting profit, financial condition, and cash flows. Businesses are not free to make up their own individual accounting methods and financial reporting practices. The established rules and standards are collectively referred to as generally accepted accounting principles (GAAP). But things are getting more complicated these days.

Presently in the United States there are continuing developments to adopt separate rules for private companies versus public companies, and for small companies versus larger companies. Furthermore, efforts to harmonize American accounting and financial reporting standards with those of other countries keep slogging along. There has been a lot of standardization. Yet, there are several areas of accounting and financial reporting in which there are differences between countries. We say more about the changing landscape of accounting and financial reporting standards in later chapters.