Relationship Between GAAP/FASB And Accounting

Decent Essays
1) What is the relationship between GAAP/FASB and personal financial statements?
Peavler, R. (2017). IFRS and FASB - What are Financial Reporting Standards? Retrieved September 25, 2017, from http://bizfinance.about.com/od/accountingandcash/a/IFRS-and-FASB-what-are-financial-reporting-standards.html)

Both GAAP and FASB have rules and regulations that need to be followed in order to make sure everything is properly reported. GAAP deals with the income statement, balance sheet and statement of cash flows. FASB is the one that constantly updates GAAP rules each year in order to have the most-up-to-date standards in business. These standards also control transactions and business firms, so they need to be properly explained and followed so financial
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(2017). Financial and management accounts. Retrieved from: https://www.nibusinessinfo.co.uk/content/importance-maintaining-accurate-accounts
It's important that your accounts are accurate and up to date. Accounts should be backed up with full and detailed records of all business income and expenditure, such as receipts, invoices and purchase orders, payments in and out. Following careful record keeping procedures can also help you with tax returns and prevent fraud or theft.

19) What are some of the limitations of personal financial statements?
Dalton, M., Dalton, J., Cangelosi, R., & Guttery, R., (2016) Personal Financial Planning: Theory and Practice. Kaplan Inc. 9th edition The following are all limitations of financial statements: inflation, use of estimates, and benchmarks. Inflation reduces the comparability of multi-period financial statements. When use of estimates exist there is a risk that the estimated value will differ from the fair market value. Benchmarks are only clear and comparable for corporations and industries that are similar. Benchmarks for individuals are unclear.
Exercises
5) Lauren and Herb have the following assets and
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Kaplan Inc. 9th edition
Due to the difficulty of the federal tax law, the IRS often issues guidance as to how it will treat certain transactions for tax purposes. This guidance is often given using Letter Rulings, Determination Letters, Revenue Rulings, Revenue Procedures and Technical Advice Memoranda.
Letter rulings- a written statement that gives guidance on the way the IRS will treat a prospective or contemplated transaction for tax purposes.
Determination Letter- written statement issued by the IRS district director that applies the principles and precedents announced by the National Office to a given set of facts.
Revenue Rulings- official interpretation on how the law should be applied.
Revenue Procedures- statements reflecting the internal management practices of the IRS that affects the rights and duties of taxpayers.
Technical advice memoranda- advice in memorandum form. 7) What are payroll taxes did the Federal Insurance Contributions Act and the Federal Unemployment Tax Act create?
Dalton, M., Dalton, J., Cangelosi, R., & Guttery, R., (2016) Personal Financial Planning: Theory and Practice. Kaplan Inc. 9th

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