Top Highlights

• First, they measure profitability at different levels. Second, they enable companies to highlight their strongest level of profitability. Third, they make bankers seem more sophisticated than they really are.
• financial transactions involve a dynamic interplay of accounts that creates this balancing effect.
• In the universe of financial reporting,
• File annual audited financial statements with the SEC • Follow accounting standards and practices as recommended by the SEC • Identify accounting and reporting problems for the FASB to address
• Businesses in the United States follow accounting rules prescribed by GAAP. Historically, businesses in other countries tended to use and apply their own countries’ standards.