Accounting for private versus public companies

In this assignment, you will compare accounting principles for private and public companies. As you may have discovered as you’ve reviewed the materials for this course, most of what is learned in accounting courses focuses on public companies, not private ones. GAAP, as you have also learned from your studies, may be followed by private companies, but it is only required to be used by publicly traded companies. FASB, of course, is designated by the SEC to establish and improve GAAP, so their focus is primarily on publicly traded companies.

FASB has also recognized the importance and potential impact of private company financial statements. According to Forbes, out of the 5.7 million firms with employees in the United States, less than 1 percent have shares listed on a U.S. exchange. Although we tend to think of private companies as small companies, the reality is quite the opposite, with private firms accounting for 86.4 percent of U.S. firms with 500 or more employees.

In recognition of the growing importance and impact of private companies, FASB has come up with a useful publication: Private Company Decision-Making Framework: A Guide for Evaluating Financial Accounting and Reporting for Private Companies.

In this guide, FASB identifies the following five Significant Differential Factors:

  1. Number of primary users and their access to management.
  2. Investment strategies of primary users.
  3. Ownership and capital structure.
  4. Accounting resources.
  5. Learning about new financial reporting guidance.

For this assignment, write a 2–4 page paper in which you:

  • Select two of the differential factors that interest you, and briefly explain why.
  • In your own words, explain the factor and why it is different from a publicly traded company.
  • Identify the accounting risks associated with each of your chosen factors. What would you recommend to minimize those risks?
  • Based on what you have learned this quarter, what components of the Balance Sheet have the most potential to be impacted by the differential factors you have chosen? Identify both positive and negative potential impacts.
Calculate your order
Pages (275 words)
Standard price: $0.00
Client Reviews
4.9
Sitejabber
4.6
Trustpilot
4.8
Our Guarantees
100% Confidentiality
Information about customers is confidential and never disclosed to third parties.
Original Writing
We complete all papers from scratch. You can get a plagiarism report.
Timely Delivery
No missed deadlines – 97% of assignments are completed in time.
Money Back
If you're confident that a writer didn't follow your order details, ask for a refund.

Calculate the price of your order

You will get a personal manager and a discount.
We'll send you the first draft for approval by at
Total price:
$0.00
Power up Your Academic Success with the
Team of Professionals. We’ve Got Your Back.
Power up Your Study Success with Experts We’ve Got Your Back.