A Top Seattle CPA firm explains accounting best practices:
Investments by owners establish or increase ownership interests in the Seattle entity and may be received in the form of cash (perhaps the best option) goods or services, or satisfaction or conversion of the entity's liabilities. Distributions decrese ownership interests and include not only cash dividens when declared, but also accounting transactions such as reacquisitions of the entity's equity securities and distributions in kind of non-cash assets.
Information about those events is useful, in conjunction with other accounting statement information, to investors, creditors, and other users (like CPAs) as an aid in assessing factors such as the entity's financial flexibility, profitability and risk. Get started with the best CPAs in the area at the link and number above.
More accounting best practices de-mystified:
Although elements defined in the statement of concepts include basic elements and are probably those more commonly identified as elements of financial accounting statements, they are not the only elements of financial accounting statements. The elements defined are a related group with a particular focus - on assets, liabilities, equity and other elements directly related to measuring performance and status of an entity. Information about an entity's performance and status provided by accrual accounting is the primary focus of financial reporting. Other statements or focuses may require other elements.
Elements and Financial Representations
Elements of financial statements are the building blocks with which financial statements are constructed - the classes of items that financial statements comprise. Elements refers to broad classes, such as assets, liabilities, revenues and expenses. Particular economic things and events, such as cash on hand or selling merchandise, that may meet the definitions of elements are not elements as the term is used in this Statement. Rather, they are called items or other descriptive names. This Statement focuses on the broad classes and their characteristic instead of defining particular assets, liabilities, or other items, according to several of the best CPA firms in Seattle we interviewed. Although notes to financial statements are described in some authoritative pronouncements as an integral part of financial statements they are not elements. They serve differente functions, including amplifying or complementing information about items in financial statements.
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