Legal Aspect of the Business Accounting
Accounting is the practice of recording or settling accounts in financial transactions and determining income and expenses for tax and other financial purposes. In a legal setting, it is often used to determine the nature and extent of damages in a lawsuit, or can even be a remedy in some cases.
There are several types of accounting commonly used, which include, among others:
Accrual: the accrual method shows expenses incurred and income earned for a given period of time whether or not such expenses and income have been actually paid or received by that time.
Cash: the cash method records income and expenses only when monies have actually been received or paid out.
Completed Contract: the completed contract method reports gains or losses on certain long-term contracts. Gross income and expenses are recognized in the tax year the contract is completed.
Installment: the installment method of accounting is a way regulated utilities calculate depreciation for income tax purposes.
The accounting profession, which is largely self-regulated, suffered through a series of scandals since the late 1990's. These controversies required the FASB and the SEC, as well as other regulatory organizations, to consider new rules designed to improve financial reporting. Between 1996 and 2002, investors lost an estimated $200 billion in earnings restatements and stock meltdowns following failures in auditing processes.
Articles on HG.org Related to Finance and Taxation
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- Protect Assets From Creditors in CaliforniaEveryone who opens a business does so with the intention of making a profit, so why do so many businesses in Fremont, Livermore, and elsewhere end up failing?
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- Federal Income Tax Considerations Involving CrowdfundingCrowdfunding is an increasingly important way of gathering funds for business and personal projects that afford the individual to create a revenue stream. By directly contacting the public, the person may seek money, but there are tax considerations that could lead to problems if they are not provided for by the individual.
- What Is Repatriation Tax for Multi-Nationals?Taxation for multinationals may come through a foreign income tax of United States based corporations for these persons and companies with increases and an entire reform of the tax system. There is over $2 trillion in earnings by these business entities that has not been taxed previously, and these new laws may increase revenue to the entire country.
- Tax Whistleblower StatuteWhistleblowers exist within many different departments of the federal government, and this includes the Internal Revenue Service which is affected by legal statutes. These persons are protected by the law from retaliation, and when communicating through official channels, supervisors are able to protect them in other capacities.
- How Will My SBA Disaster Loan Affect My Taxes?Someone requires a Small Business Administration loan with low-interest for disasters such as the California wildfires and floods in Louisiana for business owners that are connected to the SBA as a private nonprofit, a homeowner, renter or someone that is running a small business. However, various loans and income may affect the taxes of the individual through deductions or additional expenses.
- Cybersecurity Compliance Deadline for Government ContractorsComplying with cybersecurity when part of a government contract could lead to further difficulties if the company has not done so by the deadline explained in the contract for business. Security through computers, networks and electronics is important and may ensure the safety of information remains within the company and with the government agency attached to the contract.
- Tax Ramifications for Separated SpousesWhen spouses have legally separated, it is important to ensure that the taxes are filed appropriately for each individual or as a couple if one party is dependent on the other. The ramifications of filing with the wrong data or supplying the Internal Revenue Service with incorrect information could lead to penalties, additional fees and possibly criminal charges.
- Balance Sheets
A balance sheet is a snapshot of a business' financial condition at a specific moment in time, usually at the close of an accounting period. This site provides a definition and description of balance sheets in basic accounting.
- Cash Flow Forecasting
Cash Flow forecasts help you to build a model of the way in which cash moves within a project or organization. They help you to predict whether the sales or income you forecast will cover the costs of operation. They also allow you to analyze whether a project will be sufficiently profitable to justify the effort put into it.
- Income Statement
An explanation of the income statement, which is one of the major financial statements used by accountants and business owners.
- SEC - Beginners' Guide to Financial Statements
This brochure is designed to help gain a basic understanding of how to read financial statements and its basic parts.
- Statement of Cash Flows
Information about Cash Flow Statements and the various regulatory requirements.
- Understanding Cash Flow Analysis
Article from Iowas State University about cash flow analysis.
Accounting Legal Aspects
- Accountancy - Wikipedia
Accountancy is the process of communicating financial information about a business entity to users such as shareholders and managers. The communication is generally in the form of financial statements that show in money terms the economic resources under the control of management; the art lies in selecting the information that is relevant to the user and is reliable.
- Accounting and Auditing Enforcement Releases
The list below provides links to financial reporting related enforcement actions concerning civil lawsuits brought by the Commission in federal court and notices and orders concerning the institution and/or settlement of administrative proceedings. This list only highlights certain actions and is not meant to be a complete and exhaustive compilation of all of the actions that fall into this category.
- Accounting Terminology Guide
The NYSSCPA has prepared a terminology glossary as an educational tool for journalists who report on and interpret financial information.
- Ethical and Legal Obligations for Accounting
The SEC was established in 1934 by Congress to help ensure stability in the market and protect investors. The Securities Exchange Act was also established in 1934, both of which were used to protect investors and help keep the securities market ethical.
- Financial Accounting Standards Board (FASB)
The mission of the Financial Accounting Standards Board (FASB) is to establish and improve standards of financial accounting and reporting that foster financial reporting by nongovernmental entities that provides decision-useful information to investors and other users of financial reports.
- Governmental Accounting Standards Board (GASB)
The mission of the Governmental Accounting Standards Board is to establish and improve standards of state and local governmental accounting and financial reporting that will result in useful information for users of financial reports and guide and educate the public, including issuers, auditors, and users of those financial reports.
- IFRS Foundation
The IFRS Foundation is an independent, not-for-profit private sector organization working in the public interest to develop a single set of international financial reporting standards through its standard-setting body, the International Accounting Standards Board (IASB).
- Malpractice: Tax/Accounting Style - PCAOB
The Public Company Accounting Oversight Board (PCAOB) is a private-sector, nonprofit corporation created by the Sarbanes-Oxley Act of 2002 to oversee the auditors of companies in order to protect investors and the public interest by promoting informative, fair, and independent audit reports.
- Occupational Outlook Handbook - U.S. Department of Labor
The Bureau of Labor Statistics of the U.S. Department of Labor is the principal Federal agency responsible for measuring labor market activity, working conditions, and price changes in the economy. Its mission is to collect, analyze, and disseminate essential economic information to support public and private decision-making. This handbook was published by the Bureau.
- Office of the Chief Accountant
The Office of the Chief Accountant is responsible for establishing and enforcing accounting and auditing policy to enhance the transparency and relevancy of financial reporting, and for improving the professional performance of public company auditors in order to ensure that financial statements used for investment decisions are presented fairly and have credibility.
- U.S. GAAP Codification of Accounting Standards
In the U.S., generally accepted accounting principles, commonly abbreviated as US GAAP or simply GAAP, are accounting rules used to prepare, present, and report financial statements for a wide variety of entities, including publicly-traded and privately-held companies, non-profit organizations, and governments. Generally GAAP includes local applicable Accounting Framework, related accounting law, rules and Accounting Standard.