Podcast
Questions and Answers
Which of the following best describes the role of national legislation in accounting practices for limited liability companies?
Which of the following best describes the role of national legislation in accounting practices for limited liability companies?
- It is determined by international accounting standards.
- It only applies to companies listed on the stock exchange.
- It is completely separate from accounting practices.
- It primarily regulates the form and content of accounts. (correct)
Besides company law, what standards do many countries follow in addition to accounting requirements?
Besides company law, what standards do many countries follow in addition to accounting requirements?
- Ethical guidelines for accountants.
- International marketing standards.
- Labor laws and employment regulations.
- Accounting standards, either national or international. (correct)
What does GAAP encompass?
What does GAAP encompass?
- Only international accounting standards.
- Only rules derived from company law.
- Only national accounting standards.
- All rules that govern accounting in a country, regardless of source. (correct)
GAAP is identical across all countries.
GAAP is identical across all countries.
Name three sources from which GAAP rules may derive.
Name three sources from which GAAP rules may derive.
Generally Accepted Accounting Principles are collectively known as ______.
Generally Accepted Accounting Principles are collectively known as ______.
What is the primary focus when limited liability companies' accounts are being considered?
What is the primary focus when limited liability companies' accounts are being considered?
Which of the following does NOT influence financial accounting?
Which of the following does NOT influence financial accounting?
Accounting standards are exclusively national and do not have international influence.
Accounting standards are exclusively national and do not have international influence.
Match the following:
Match the following:
Which body issues International Financial Reporting Standards (IFRSs)?
Which body issues International Financial Reporting Standards (IFRSs)?
Accounting standards form a significant part of GAAP and we will be referring to these (specifically, ______) throughout this Study Guide.
Accounting standards form a significant part of GAAP and we will be referring to these (specifically, ______) throughout this Study Guide.
Which of the following can be rules that govern the preparation of financial statements?
Which of the following can be rules that govern the preparation of financial statements?
The factors that shape financial accounting do not include other international influences.
The factors that shape financial accounting do not include other international influences.
Besides national accounting standards, which standard can GAAP derive from?
Besides national accounting standards, which standard can GAAP derive from?
Aside from national company legislation, what other kind of requirements in other countries can GAAP derive from?
Aside from national company legislation, what other kind of requirements in other countries can GAAP derive from?
In most countries, limited liability companies are required by ______ law to prepare and publish accounts annually.
In most countries, limited liability companies are required by ______ law to prepare and publish accounts annually.
Match the descriptions with the terms:
Match the descriptions with the terms:
Flashcards
Generally Accepted Accounting Principles (GAAP)
Generally Accepted Accounting Principles (GAAP)
Rules that govern financial statement preparation, including company law, accounting standards and stock exchange requirements.
National Legislation
National Legislation
Laws at a country level that require companies to prepare and publish annual accounts.
Accounting Standards
Accounting Standards
Accounting guidelines followed by many countries, either national or international (IFRS).
Definition of GAAP
Definition of GAAP
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Study Notes
- Rules govern the preparation of financial statements.
- These rules include company law, national accounting standards, International Financial Reporting Standards, and Stock Exchange requirements.
- They are known as GAAP, Generally Accepted Accounting Principles.
Introduction
- This section considers factors that have shaped financial accounting, concentrating on the accounts of limited liability companies due to their heavily regulated nature.
- Factors include national legislation, accounting concepts, individual judgment, national and international accounting standards, international influences, and generally accepted accounting principles (GAAP).
National Legislation
- Limited liability companies are legally obligated in most countries to prepare and publish accounts annually.
- The form and content of these accounts are primarily regulated by national legislation (e.g., Corporations Act 2001).
Accounting Standards
- Many countries follow accounting standards in addition to company law accounting requirements.
- These can be national (e.g., Australian Accounting Standards) or international (International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB)).
- IFRSs will be used to explain the accounting treatment of various items.
Generally Accepted Accounting Principles (GAAP)
- GAAP encompasses accounting requirements from company law and accounting standards.
- GAAP are the rules determining accounting in a country.
- GAAP varies between countries but often share similarities.
- Accounting standards are a significant part of GAAP, and IFRSs are referred to throughout the text.
- GAAP is defined as a set of rules governing accounting derived from:
- National accounting standards and IFRSs
- National company legislation
- Statutory requirements in other countries (particularly the US)
- Stock exchange requirements
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