Presumes that the life of a company can be divided into time periods, months/years, & useful reports can be prepared for those periods Business entity assumption a business is accounted for separately from other business entities, including its owner. Materiality constraint
Presumes that the life of a company can be divided into time periods, months/years, & useful reports can be prepared for those periods
Business entity assumption
a business is accounted for separately from other business entities, including its owner.
Materiality constraint
Only information that influences decisions (through importance/dollar amt) need be disclosed
Cost-benefit constraint
Only info with benefits of disclosure greater than costs of providing need be disclosed
external accounting users
lenders
shareholders
governments
consumer groups
external auditors
customers
internal accounting users
executives
managers
internal auditors
sales staff
budget analysts
controllers
SOX- Sarbanes-Bosley Act
-initiated to stop abuses at companies that share stock to the
public.
-requires that these companies apply both accounting oversight & stringent
internal controls
-desired results are more transparency, accountability, & truthfulness in
transaction recording
Dodd-Frank Wall St. Reform & Customer Protection Act
-promote accountability
-put an end to “too big to fail”
-protects taxpayers by ending bailouts
-protects consumers from abusive financial services
Sustainability Accounting Standards Board (SASB)
nonprofit entity engaged in creating & disseminating sustainability accounting standards for companies
return on assets equation
net income/average total assets
equity equation
+owner’s capital
-owner withdrawals
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