Accounting Principles : if everyone involved in the process of accounting followed their own system, or no system at all, there’s be no way to truly tell whether a company was profitable or not. Most companies follow what are called generally accepted accounting principles, or GAAP, and there are huge tomes in libraries and bookstores devoted to just this one topic. Unless a company states otherwise, anyone reading a financial statement can make the assumption that company has used GAAP.
If GAAP are not the principles used for preparing financial statements, then a business needs to make clear which other form of accounting they’re used and are bound to avoid using titles in its financial statements that could mislead the person examining it.
GAAP are the gold standard for preparing financial statement.
Not disclosing that it has used principles other than GAAP makes a company legally liable for any misleading or misunderstood data. These principles have been fine-tuned over decades and have effectively governed accounting methods and the financial reporting systems of businesses. Different principles have been established for different types of business entities, such for-profit and not-for-profit companies, governments and other enterprises.
GAAP are not cut and dried, however, explains Cabinet Comptable Brest . They’re guidelines and as such are often open to interpretation. Estimates have to be made at times, and they require good faith efforts towards accuracy. You’ve surely heard the phrase “creative accounting” and this is when a company pushes the envelope a little (or a lot) to make their business look more profitable than it might actually be. This is also called massaging the numbers. This can get out of control and quickly turn into accounting fraud, which is also called cooking the books. The results of these practices can be devastating and ruin hundreds and thousands of lives, as in the cases of Enron, Rite Aid and others.
Making a Profit : accountants are responsible for preparing three primary types of financial statements for a business. The income statement reports the profit-making activities of the business and the bottom-line profit or loss for a specified period. The balance sheets reports the financial position of the business at a specific point in time, often the last day of the period. and the statement of cash flows reports how much cash was generated from profit what the business did with this money.
Everyone knows profit is a good thing.
It’s what our economy is founded on. It doesn’t sound like such a big deal. Make more money than you spend to sell or manufacture products. But of course nothing’s ever really simple, is it? A profit report, or net income statement first identifies the business and the time period that is being summarized in the report.
You read an income statement from the top line to the bottom line.
Every step of the income statement reports the deduction of an expense. The income statement also reports changes in assets and liabilities as well, so that if there’s a revenue increase, it’s either because there’s been an increase in assets or a decrease in a company’s liabilities. If there’s been an increase in the expense line, it’s because there’s been either a decrease in assets or an increase in liabilities.
Net worth is also referred to as owners’ equity in the business.
They’re not exactly interchangeable, explains Expert Comptable Grenoble . Net worth expresses the total of assets less the liabilities. Owners’ equity refers to who owns the assets after the liabilities are satisfied, explains .
These shifts in assets and liabilities are important to owners and executives of a business because it’s their responsibility to manage and control such changes. Making a profit in a business involves several variable, not just increasing the amount of cash that flows through a company, but management of other assets as well.
Outdoor space : imagine a beautiful spring evening spent outside on your patio. Now picture how quickly a sudden shower can turn that idyllic image into a wet dash for cover. Or consider a summer afternoon picnic out on the deck. The sun and the scenery are great, but what about the bugs?
For many homeowners, patios and decks are a terrific investment toward spending more time outdoors. But those home additions come with something unpredictable: the great outdoors itself, with all its natural wonders-and hazards. But a new concept in construction is helping turn those exterior spaces into something more: all-purpose, three-season rooms that protect against the very things that could otherwise spoil a good time outside.
Porch systems enclose an existing or newly constructed patio or deck using pre-engineered modular wall panels and joining posts. Wooden wall panels help protect against the cool air and damaging sun, and are secured to the floor using a threshhold. Channeled vertical posts join the wall panels together to create a visually appealing facade.
Carpenters and ambitious do-it-yourselfers can assemble Vixen Hill’s three-season or open rail porch systems with ease. The products’ modular design eliminates the complicated carpentry normally involved in this type of construction. Pre-assembled components (modules) are designed to require the minimum number of fasteners for an uncomplicated, systematic installation.
“Most outdoor space is designed for a specific purpose and satisfies only one particular need,” says Christopher Peeples, president and founder of Landscaper Dallas. “The key benefit of our porch systems is that they have multiple uses. Created to give the feeling of the traditional wooden porch and bring the comfort of the indoors outside, the addition can be an ideal space for entertaining friends and family, dining, reading or just relaxing. Homeowners get the best of outdoor living without leaving the house.”