Legal Aspect of the Business Accounting

http://www.hg.org/busaccounting.html
Accounting is the practice of recording or settling accounts in financial
transactions and determining income and expenses for tax and other
financial purposes. In a legal setting, it is often used to determine the
nature and extent of damages in a lawsuit, or can even be a remedy in
some cases.
There are several types of accounting commonly used, which include,
among others:
Accrual: the accrual method shows expenses incurred and income
earned for a given period of time whether or not such expenses and
income have been actually paid or received by that time.
Cash: the cash method records income and expenses only when
monies have actually been received or paid out.
Completed Contract: the completed contract method reports gains or
losses on certain long-term contracts. Gross income and expenses are
recognized in the tax year the contract is completed.
Installment: the installment method of accounting is a way regulated
utilities calculate depreciation for income tax purposes.
The accounting profession, which is largely self-regulated, suffered
through a series of scandals since the late 1990's. These controversies
required the FASB and the SEC, as well as other regulatory
organizations, to consider new rules designed to improve financial
reporting. Between 1996 and 2002, investors lost an estimated $200
billion in earnings restatements and stock meltdowns following failures
in auditing processes.
Accounting Legal Aspects
Accountancy - Definition
Accountancy is the process of communicating financial information
about a business entity to users such as shareholders and managers.
The communication is generally in the form of financial statements
that show in money terms the economic resources under the control of
management; the art lies in selecting the information that is relevant
to the user and is reliable.
Accounting and Auditing Enforcement Releases
The list below provides links to financial reporting related enforcement
actions concerning civil lawsuits brought by the Commission in federal
court and notices and orders concerning the institution and/or
settlement of administrative proceedings. This list only highlights
certain actions and is not meant to be a complete and exhaustive
compilation of all of the actions that fall into this category.
Accounting Terminology Guide

The NYSSCPA has prepared a terminology glossary as an educational

tool for journalists who report on and interpret financial information.
Ethical and Legal Obligations for Accounting
The SEC was established in 1934 by Congress to help ensure stability
in the market and protect investors. The Securities Exchange Act was
also established in 1934, both of which were used to protect investors
and help keep the securities market ethical.
Financial Accounting Standards Board (FASB)
The mission of the Financial Accounting Standards Board (FASB) is to
establish and improve standards of financial accounting and reporting
that foster financial reporting by nongovernmental entities that
provides decision-useful information to investors and other users of
financial reports.
Governmental Accounting Standards Board (GASB)
The mission of the Governmental Accounting Standards Board is to
establish and improve standards of state and local governmental
accounting and financial reporting that will result in useful information
for users of financial reports and guide and educate the public,
including issuers, auditors, and users of those financial reports.
IFRS Foundation
The IFRS Foundation is an independent, not-for-profit private sector
organization working in the public interest to develop a single set of
international financial reporting standards through its standard-setting
body, the International Accounting Standards Board (IASB).
Malpractice: Tax/Accounting Style - PCAOB
The Public Company Accounting Oversight Board (PCAOB) is a privatesector, nonprofit corporation created by the Sarbanes-Oxley Act of
2002 to oversee the auditors of companies in order to protect investors
and the public interest by promoting informative, fair, and independent
audit reports.
Occupational Outlook Handbook - U.S. Department of Labor
The Bureau of Labor Statistics of the U.S. Department of Labor is the
principal Federal agency responsible for measuring labor market
activity, working conditions, and price changes in the economy. Its
mission is to collect, analyze, and disseminate essential economic
information to support public and private decision-making. This
handbook was published by the Bureau.
Office of the Chief Accountant
The Office of the Chief Accountant is responsible for establishing and
enforcing accounting and auditing policy to enhance the transparency
and relevancy of financial reporting, and for improving the professional
performance of public company auditors in order to ensure that
financial statements used for investment decisions are presented fairly
and have credibility.
U.S. GAAP Codification of Accounting Standards

In the U.S., generally accepted accounting principles, commonly

abbreviated as US GAAP or simply GAAP, are accounting rules used to
prepare, present, and report financial statements for a wide variety of
entities, including publicly-traded and privately-held companies, nonprofit organizations, and governments. Generally GAAP includes local
applicable Accounting Framework, related accounting law, rules and
Accounting Standard.
Financial Statements
A financial statement (or financial report) is a formal record of the
financial activities of a business, person, or other entity. Relevant
financial information is presented in a structured manner and in a form
that is easy for a reader to understand. A financial statement, also
sometimes referred to as a "balance sheet," reports a company's
assets, liabilities, and ownership equity at a given point in time. For
large corporations, these statements are often complex and may
include an extensive set of notes describing each item. While often
used for a similar purpose, financial statements are less formal or
thorough than a full audit of a company's financial records. The
resources below further describe the practical and legal considerations
of the financial statement.
Balance Sheets
A balance sheet is a snapshot of a business' financial condition at a
specific moment in time, usually at the close of an accounting period.
This site provides a definition and description of balance sheets in
basic accounting.
Cash Flow Forecasting
Cash Flow forecasts help you to build a model of the way in which cash
moves within a project or organization. They help you to predict
whether the sales or income you forecast will cover the costs of
operation. They also allow you to analyze whether a project will be
sufficiently profitable to justify the effort put into it.
Income Statement
An explanation of the income statement, which is one of the major
financial statements used by accountants and business owners.
SEC - Beginners' Guide to Financial Statements
This brochure is designed to help gain a basic understanding of how to
read financial statements and its basic parts.
Statement of Cash Flows
Information about Cash Flow Statements and the various regulatory
requirements.
Understanding Cash Flow Analysis
Article from Iowas State University about cash flow analysis.
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