Principles of Managerial Finance, 15th Edition

3.1 The Stockholders’ Report

1. LG1

Every corporation has many uses for the standardized reports of its financial activities. Periodically, companies prepare reports for regulators, creditors (lenders), owners, and management. The guidelines they use to prepare and maintain financial records are known as generally accepted accounting principles (GAAP). The accounting profession’s rule-setting body, the Financial Accounting Standards Board (FASB), authorizes these accounting principles.

In addition, the Sarbanes-Oxley Act of 2002, enacted in an effort to eliminate many disclosure and conflict of interest problems of corporations, established the Public Company Accounting Oversight Board (PCAOB), a not-for-profit corporation that oversees auditors ...