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Our accountants at a glance:
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A North Houston CPA offers standard accounting advice:
FASB Statement of Concepts - Even objectives that are oriented more towards stewardship are concerned with decisions. The broader stewardship use of accounting, which is concerned with the efficiency, effectiveness, and integrity of the steward, helps stockholders or other financially interested parties (for example, bondholders) to evaluate the management of an enterprise. But that would be a pointless activity if there were no possibility of taking action based on the results.
Management is accountable to stockholders in North Houston and across the US through an elected board of directors, but stockholders are often passive and do not insist on major management changes as long as an enterprise is reasonably successful. Their appraisals of management's stewardship help them to assess prospects for their investments, and stockholders who are dissatisfied with management's stewardship of those investments commonly sell their stock in the enterprise.
Bondholders are concerned with management's compliance with bond indentures and may take legal action if covenants are broken. Thus, decision making and stewardship are interrelated accounting and CPA objectives. Indeed, the stewardship role of accounting may be viewed as subordinate to and a part of the decision making role, which is virtually all encompassing.
Accounting terms defined: Under the double entry system, each transaction must be recorded with a debit and a credit. Debit and credit postings are then made to a ledger account. At the end of the accounting period, balances are taken from each ledger account and are used to prepare financial statements. The four basic financial statements are the income statement, balance sheet, capital statement and statement of cash flows.
