Question

1: What does SEC stands for? what its role? 2: List and describe in detail two (2) of the GAAP principles Please Note: Your
0 0
Add a comment Improve this question Transcribed image text
Answer #1

1. SEC stands for "Securities & Exchange commission". Securities & Exchange commission is an independent agency of the United States federal government. The main objective behind formation of Securities & exchange commission was to protect the investors in United States by maintaining a fair and orderly functioning securities market. It is responsible for ensuring transparency and credibility in the securities market. SEC requires the publicly traded companies to disclose their financial information to the general public. The goal of the Commission is to offer information to investors and maintain efficient and transparent markets.

The main role of Securities and Exchange commission is to make and enforce regulations to check the activities of various entities which includes brokers, dealers, investment bankers, investment advisory companies and publicly held companies. Securities and exchange commission oversees the involvement and operations of organizations and individual investors. It also aims at establishing more effective regulations for over-the-counter derivatives and hedge funds.

The role of the Securities and Exchange Commission itself is to maintain efficient, transparent, and effective markets. Hence if I were to summarize in simpler terms, role of SEC is to regulate stock markets and associated parties in order to protect the investors from fraud, malpractice etc.

2. Two of GAAP principles are as follows :

a) Full Disclosure Principle : This is one of the most important GAAP principles from the reporting perspective. Financial statements are supposed to provide all the information regarding the entity. There are many stakeholders which are dependent on the financial statements of an entity for making various decisions such as investors for making investment decisions, management for making managerial decisions, trade unions for determining the fair amount of wages etc.

Financial statements normally provide information about a company's past performance. However, pending lawsuits, incomplete transactions, or other conditions may have highly significant effects on the company's status which might also be very important for the stakeholders and if the stakeholders are not aware of such transactions or lawsuits, they may make a wrong decision. The full disclosure principle requires the company to make disclosure of all such information as well. Balance sheet, Income statement & Cash flow statement are 3 major components of the financial statements, however, notes to financial statements and the accounting policies followed by the company are also very important and should be disclosed in full detail as per the applicable standards. Footnotes describe the policies adopted by the company in recording and reporting the transactions.

b) Revenue recognition principle : This is again one of the most important GAAP principles for any entity. Revenue is the most major part of any organization and this principle deals with when such revenue should be recognized, in which year and what amount should be recognized. It states that revenue should not be recognized until delivery of goods or completion of services. It means that revenue should only be recognized once risk and rewards or control & ownership has been passed to the other party.

This can also be explained with the help of an example of a lawyer who is on retainer. Suppose ABC company has paid retainer fees to the lawyer amounting to 1000 $. Now the lawyer will not recognize the revenue of 1000$ in his books on receipt of cash. Rather he will first record it as a liability as deferred revenue and he will only recognize it as revenue when the services have been provided to ABC company. This principle majorly deals with the cut-off assertion and tries to ensure that revenue has been recorded in the correct period.

Add a comment
Know the answer?
Add Answer to:
1: What does SEC stands for? what it's role? 2: List and describe in detail two...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • 1. Describe the functions of the following reagents in extraction of DNA from corn meal: proteina...

    1. Describe the functions of the following reagents in extraction of DNA from corn meal: proteinase K; guanidine HCI; SDS 2. Why is the ratio of the OD at 260 and 280 nm used to estimate DNA purity? 3. In one paragraph, summarize basic principles of PCR technique in your own words. List all the reagents you will need to perform a PCR experiment. Does this method tell you what genetic modifications were made? If yes, describe how you can...

  • Can somebody help me with my accounting project, here are the instructions: Financial Analysis Project Project...

    Can somebody help me with my accounting project, here are the instructions: Financial Analysis Project Project Requirements and Instructions Sheet Objective In accordance with the Knowledge, Skills and Abilities objectives of the course, you are required to evaluate the financial performance of a publicly traded US Corporation and write a 10 page (excluding appendix and other supporting documents) report on your findings. This event will help participants develop the ability to understand, analyze, and make decisions based on financial information—these...

  • What Exactly Does Being “Creative” and “Effective” Mean? An argument can be made that “effective” or...

    What Exactly Does Being “Creative” and “Effective” Mean? An argument can be made that “effective” or successful advertising is usually being creative with a purpose. Certainly, the notion of effective advertising can vary from culture to culture. In the United Kingdom, a premium may be placed on being different, humorous, or out-of-the ordinary in differentiating campaigns from the mass of mediocre advertising. In the United States, creative advertising is viewed more often as being “effective” in that the creativity has...

  • Any reflection or opinion on these two essays? Should Marijuana be legal? 1 answer Within 200...

    Any reflection or opinion on these two essays? Should Marijuana be legal? 1 answer Within 200 words. 1. A Brief History of the Drug War Many currently illegal drugs, such as marijuana, opium, coca, and psychedelics have been used for thousands of years for both medical and spiritual purposes. The Early Stages of Drug Prohibition Why are some drugs legal and other drugs illegal today? It's not based on any scientific assessment of the relative risks of these drugs –...

  • Ch 1 1. Given the following dat Dec 31 Year 2 Dec 31 Year 1 Total...

    Ch 1 1. Given the following dat Dec 31 Year 2 Dec 31 Year 1 Total liabilities S128,250 $120,000 Total stockholders oquity 95.000 80.000 compute the ratio of liabilities to stockholders' equity for each year Round to two decimal places 1.50 and 107, 11.35 and 1.50 respectively respectively 1.07 and 1.19. 1.1.19 and 1.35 respectively respectively The liabilities and stockholder's equity of a company are $132,000 and $244.000, respectively. Assets should equal SS188.00 $132.00 p $376,00 12.000 A financial statement...

  • please read instructions on the first picture and follow it Discussion Board: Chapter 1 Due: Jun...

    please read instructions on the first picture and follow it Discussion Board: Chapter 1 Due: Jun 28, 2019 at 11:59 PM Please read the article titled Evolution of Operations Planning and Control: from production to supply chains In at least three paragraphs, describe how and why the focus of operations planning and control has changed over time. While one might argue that answers consisting of sentences quoted from articles do not represent plagiarism, I do not consider them acceptable, and...

  • please read instructions on the first picture and follow it Discussion Board: Chapter 1 Due: Jun...

    please read instructions on the first picture and follow it Discussion Board: Chapter 1 Due: Jun 28, 2019 at 11:59 PM Please read the article titled Evolution of Operations Planning and Control: from production to supply chains In at least three paragraphs, describe how and why the focus of operations planning and control has changed over time. While one might argue that answers consisting of sentences quoted from articles do not represent plagiarism, I do not consider them acceptable, and...

  • Using the book, write another paragraph or two: write 170 words: Q: Compare the assumptions of...

    Using the book, write another paragraph or two: write 170 words: Q: Compare the assumptions of physician-centered and collaborative communication. How is the caregiver’s role different in each model? How is the patient’s role different? Answer: Physical-centered communication involves the specialists taking control of the conversation. They decide on the topics of discussion and when to end the process. The patient responds to the issues raised by the caregiver and acts accordingly. On the other hand, Collaborative communication involves a...

  • 10. The Beck & Watson article is a Group of answer choices quantitative study qualitative study...

    10. The Beck & Watson article is a Group of answer choices quantitative study qualitative study 11. Beck & Watson examined participants' experiences and perceptions using what type of research design? Group of answer choices particpant obersvation phenomenology 12. Select the participants in the Beck & Watson study Group of answer choices Caucasian women with 2-4 children Caucasian pregnant women 13. In the Beck & Watson study, data was collected via a(n) Group of answer choices internet study focus group...

  • 14. Select the number of participants in the Beck & Watson study Group of answer choices...

    14. Select the number of participants in the Beck & Watson study Group of answer choices 8 13 22 35 15. Beck & Watson determined their final sample size via Group of answer choices coding saturation triangulation ethnography 16.Through their study, Beck & Watson determined Group of answer choices after a traumatic birth, subsequent births have no troubling effects after a traumatic birth, subsequent births brought fear, terror, anxiety, and dread Subsequent Childbirth After a Previous Traumatic Birth Beck, Cheryl...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT