Essay on Financial Accounting And The Global Economy

1493 Words 6 Pages
Financial accounting is used to keep track of money movement within an organization. Businessmen and women must have some familiarity with the world of accounting to prevent problems or mistakes from getting out of control. In the global market of today, an organization’s inability to accurately report financial standing can cause major ripples through the global economy. An underperforming accounting department can ruin a business’ prospects for success in the future. Business leaders must have a working knowledge of the governing bodies and reports generated in accounting, understand financial statements, and recognize the three categories of accounting to ensure proper transparency of the organization’s financial stability. The world of accounting has many rules and regulations along with organizations to ensure accounting reports have the proper information to allow investors to make an informed decision whether or not to invest in a particular stock. These include generally accepted accounting principles (GAAP), international accounting standard (IAS), and Securities and Exchange Commission (SEC). “GAAP is a term that refers to a set of rules, standards and practices used throughout the accounting industry to prepare and standardize financial statements that are issued outside the company” (Arline, 2015). If these standards did not exist, then companies could publish any information they like to entice investors and creditors to contribute to the organization.…

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