In Microsoft? case, the ratio is . 23; this is a proportion of equity and debt used to finance the assets. International Accounting Standards Board vs.. Financial Accounting Standards Board International Accounting Standards Board, ASSAI Is an independent, privately-funded accounting board who set accounting standards for international companies. The Financial Accounting Standards Board, FAST Is a private board that Is established to set accounting standards for United States companies. Both boards are set up to help understand the financial statements of companies.
However, the FAST only deals with united States companies unlike the SAAB that deals internationally. Therefore, SAAB echelons may take longer compared Walt ten FAST Decease teen nave to consoler how global companies operate financially and make their decisions based on the world. Yet, both companies objective is to set standards that are clear, concise, and fair. The cash basis vs.. The accrual basis There are two approaches to accounting, the cash basis and the accrual basis. The cash basis is quite familiar because is similar to maintaining a personal checkbook here the receipts and payments of cash are recorded.
But most corporations use the accrual basis to measure their income and financial position. The accrual basis ? the impact of transactions on the financial statements in the periods when revenues and expenses occur instead of when the company receives or pays cash?C,-1?0 (Horned, Sunder, Stratton, Burgomaster, Chatterer, 2008). That is, the company records revenue when it earns it, and it records expenses when it incurs them. Key Financial Statements The key financial statements for Microsoft Corporation are the income statement, the lance sheet, statement of equity and the statement of cash flows.
Individual items in each financial statement carry over or are part of another statement and so forth, affecting the results of those statements. For example, net income from the income statement is entered in the statement of equity but it is also reflected in the balance sheet as well as in the cash flow statement. It is vital to understand this relationship as an entry/adjustment to one statement will flow through to the other statements. Conclusion For companies to be successful, it is key to monitor how the money is being spent, ND accounting provides with the right tools to assess the financial progress of a company.