I need a 150 word reply to each of the following two forum posts made by my classmates (300-words total) (the original forum question[1] is at the bottom):
Reply #1 [1]
For this first discussion point, I decided to go with question number one. Primarily because I have no idea what GAAP and IFRS even are! I figure this will give me a good opportunity to do some research and learn about them.
GAAP is short for Generally Accepted Accounting Principles, which within the United States, delivers boundaries and standards for accounting practices. These accounting boundaries and standards would include financial statements such as the balance sheet and income statement.
With GAAP, outside parties such as investors or board members can learn quite a bit about a company just from financial statements like the balance sheet or income statement. This allows for greater transparency into the health of any business.
IFRS is short for International Financial Reporting Standards. From reading through some articles, the main intent of IFRS is to create a set of standards that are easily understood, enforceable, and of high quality. These standards help any company to prepare its financial statements, share information, and report economic reports. Very similar to GAAP, IFRS also provides outside parties reliable and transparent information about a business’s financial strength, market position, and their performance.
The major difference between these two is that GAAP is primarily used in the United States and IFRS is most commonly used internationally. Even though GAAP and IFRS assist in guiding businesses on how to report their financial information so that others can make knowledgeable decisions, results can very on which process is used.
The United States, as well as other super-power countries, around the world, are constantly doing dealings with various companies. I would say that most of these dealings would be large-scale companies, such as Samsung Electronics and Apple, implementation of international accounting would be feasible. On the other side, the United States has a lot of small very wealthy companies. That being said, I do not think the implementation of accounting standards worldwide would be feasible.
Resources
https://scalefactor.com/ask-the-experts/what-is-gaap/
https://www.businessinsider.com/ifrs
Reply #2
Hello class,
I chose to answer question #2. I have pasted it below for reference.
“Look at the origins and purposes of accounting and discuss how our society’s development has been affected by its use. Could our society function as it currently does without accounting? Please explain.”
My answer to this question would have to be, no, our society could not function as it currently does without accounting. Our society, the way it functions currently requires accounting. Every single business entity in the world needs it to ensure they are in a good profit margin as well as ensuring they are operating efficiently. The only way to ensure that is to keep a good record of all finances and using accounting be it by hiring an accountant or having some accounting background. Every business has profits and losses. A business cannot function without a profit, or it will go bankrupt.
According to the basic accounting equation of assets = liabilities + stockholders’ equity, without accounting, businesses would have no way of tracking how much money they were really profiting or spending. This would cause stockholders to question whether their money was being taken care of as well as whether they should continue to keep stock in this business. Without accounting and all aspects of the process, businesses would just see money coming in and going out with no system of knowing whether they were profiting or loosing until it was happening in front of their face with no warning. There would be no balance sheets, no income statements, nothing at all to track anything dealing with money to the full extent. Accounting works by showing where money is going and where its coming from as well as where there needs to be some help and where you can pull from. It helps to create informed decisions to keep businesses thriving, without it, businesses would be making decisions that are on a gut feeling or uninformed much like trying to throw a dart at a dart board with a blindfold on. You have no way of knowing where the dart board is in retrospect of yourself or if you’re aiming in the right direction.
[1] Original Forum Question:
The Week 1 Discussion consists of two separate questions. You will answer one of the three questions.
(1st question) Compare and contrast the development and use of GAAP and IFRS. Do you think the implementation of international accounting standards is feasible? Please explain.
(2nd question) Look at the origins and purposes of accounting and discuss how our society’s development has been affected by its use. Could our society function as it currently does without accounting? Please explain.
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