Accounting And Accounting: The Art Of Accounting

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The Art of finance
“The art of accounting and finance is the art of using limited data to come as possible to an accurate description of how well a company is performing. “
It depends on the ability of the accountants and finance professionals, to examine what the numbers really mean, and with that, they can give the correct application to the company itself.
Though history we can see a lot of judgment calls in many companies, acting as a result of modifying the use of finance in different ways. Like frauds applied to revenues recognition, and like putting operational expenses as capital expenses, so in that way, the bottom line can increase, I only can say that making these kind of acts of dishonesty, the man degrades his authenticity.
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GAAP rules are established and administered by the Financial Accounting Standards Board (AICPA). The GAAP rules give to investors and others a reliable way to compare financial results between companies, industries, from one year to another. The International Finance Reporting Standards (IFRS), has the goal that includes, to make company comparisons from one country to another as easy as possible. The United States need to implement completely the IFRS into each company so that one day in all over the world they can used the same language, in every financial…show more content…
Actual income statements show what actually happened to revenues, costs, and profits during a period according to the GAAP principles. There are also pro forma and non-GAAP income statements. Pro forma means that the income statement is a projection.
The income statement is divided by three parts, at the top line it has the revenues or sales, at the middle line, it has the costs and expenses and at the bottom line it has the profits or loses. When someone is looking at any income statement it’s essential to take a look to the footnotes because in there you can see how the accountants arrived to the totals. One big rule in the income statement is that many numbers reflect estimates and assumptions. Most of the time accountants have decided to include some transactions here and not there. They have to estimate most of the times.
First of all, it’s essential to know how to manage the recognition of revenues. It started when the product is delivered to the costumer. Also the organizations have the backlog and bookings that are the orders that have been signed but not yet started, or the revenue not yet recognized on partially completed projects. Another term is the deferred revenue, that consists in money that has come in but is as yet unearned. For instance, when you buy an airplane ticket, the airline charges your credit card immediately, even if you are not planning to fly for another four

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