Finacial Accounting Essay

368 Words2 Pages
GAAP (General Accepted Accounting Principles): -‐ -‐ Consists of rules, practices and procedures, the authority of which stems from their general acceptance and use by the accounting profession and the business community. Evolved by experiences, and thinking of members of accounting profession and influential businesspeople. 19th century: -‐ -‐ -‐ Need for the development of rigid, compulsory accounting standard was recognized due to growth of industrialized society. (company was born) Management was appointed as an agent of the owners (shareholders) of the company to conduct the day-‐today operations with a view to earning profits for the owners. To provide some protections for shareholders, governments began to legislate for the preparation a balance sheet by companies in order to monitor the behavior of managers as stewards of the shareholders funds, which was first done by Victorian government to legislate for the presentation of both a balance sheet and income statements for companies. ICAA (Institute of Charted Accountants in Australia) 1940s: -‐ -‐ First attempt was made by the accountant profession in Australia to provide guidance as to the content of these statements ICAA adopted a series of recommendations developed in the UK by the equivalent professional body in England and Wales. It was ignored by the entities since it was only recommendations. AARF (Australian Accounting Research Foundation) 1950s -‐1960s : -‐ -‐ -‐ After a lot of companies’ failure, which caused many shareholders to lose considerable savings, much criticism was directed towards the content of externally reported financial statements. AARF

More about Finacial Accounting Essay

Open Document