Hardly a day goes by without an article appearing on the crises affecting many of our financial...

Question

Hardly a day goes by without an article appearing on the crises affecting many of our financial institutions in the United States. It is estimated that the savings and loan (S&L) debacle of the 1980s, for example, ended up costing $500 billion ($2,000 forevery man, woman, and child in the United States). Some argue that if the S&Ls had been required to report their investments at market value instead of cost, large losses would have been reported earlier, which would have signaled regulators to close those S&Ls and, therefore, minimize the losses to U.S. taxpayers. Explain how reported accounting numbers might affect an individual’s perceptions and actions. Cite two examples.

David · Accepted Answer

Solution:- 
Accounting can be defined as the process of analyzing, recording and presenting the 
accounting transactions in a proper manner. To make accounting process more appropriate 
accounting standard board keeps issuing the new accounting standards and update the existing 
ones frequently.  
Accounting is mainly concerned with general rules, concepts and principles that are 
established with the purpose of governing different fields of financial reporting. Accounting 
principles are also known as accounting principles and guidelines, these acts as the base on 
which more complex and critical rules are based. The authority responsible for issuing the 
accounting standards (i.e. financial accounting standard board) also uses these basic principles to 
formulate the accounting standards in a more efficient manner. 
Generally accepted accounting principles (GAAP) consist of various rules and principles 
which are used for preparing the financial statements. GAAP consist of three important fields:- 
1) Basic accounting principles and guidelines. 
2) Various accounting standards issued by FASB. 
3) Generally accepted practices in the industry.  
All those companies which are providing its financial statement to public is required to 
follow the GAAP while preparing the financial statements. Further,

Hardly a day goes by without an article appearing on the crises affecting many of our financial institutions in the United States. It is estimated that the savings and loan (S&L) debacle of the 1980s,...

Solution

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment