Finance

[Name of the Institute]Finance

Generally Accepted Accounting Principles

Generally Accepted Accounting Principles (US GAAP) is a general set of procedures, standards and principles that are used by various firms in order to compile the financial statements. It is a combination of policy boards which is commonly accepted for reporting and reporting of the information of accounting (Arnold, 2012).

Importance of GAAP

Generally Accepted Accounting Principles serves a common language for finance and accounting professionals and thereby allowing stakeholders in comparison of financial statements of co operations. GAAP also allows an investor to who wants to invest in the firm based on the financial performance. The realistic conclusion can also be drawn by the manager for the performance of division as the accounts is stick on a single set of consistent principle over the period of time. The risk is also minimized as the unintentional error because of the checks implementation and the safeguards due to which the confidence is provided to users of the financial statements.

International Financial Reporting Standards

IFRS is a set of international accounting standard which states the specific types of the transactions and other procedures that need to be reported in the financial statements. IFRS is an issue by the International Accounting Standards Boards.

Importance

IFRS provide benefits to investors and other users of the financial statements because the cost is reduced for investment and the quality is being increased for the information provided. The financial statements become more transparent, and therefore investors will get more attracted for financing in firms. IFRS makes international comparison easy because the financial statements becomes transparent and easy to understand as compared to the GAAP.

Security and Exchange Commission

Security and Exchange commission are the primary federal regulatory authority for the securities industry. The role of SEC is to promote the full disclosure and the protection of investors against the manipulative and fraudulent disclosure in the securities markets.

Importance

If a firm is showing fraudulent and manipulative disclosure that can attract an investor to invest in the firm, therefore the SEC protects an investor from the manipulative and fraudulent disclosure of the firm. This concept plays an important role as financial statement are made by the firm according to the guidance and instruction provided by the SEC and are reported to Security and Exchange Commission (Holden, 2012).

Annual Reports

It is an annual publication that the public firms must provide in order to describe conditions of their financial and operations to their shareholders.

Importance

The annual reports of the firms show the complete summary of the firm's revenue, changes in operations of the business, the financial activities of the firm. It is important for the financial statement because stakeholders want the complete summary of the firm's activities. It shows the complete picture of financial statement for instance the short and long term, the cash flow statements, leasing, the total assets capitalized by the firm and everything. It is important for the financial statement because annual reports are made on a single basis; GAAP, IFRS etc and the same structure are being followed throughout. It also shows ...