Term

What is the primary purpose of US GAAP?

Definition

In the US, the Securities and Exchange Commission ("SEC") authorizes the Financial Accounting Standards Board ("FASB") to determine the set of accounting rules followed by publicly traded companies. Under FASB, financial statements are required to be prepared in accordance with US Generally Accepted Accounting Principles ("US GAAP"). Through the standardization of financial reporting and ensuring all financials are presented on a fair, consistent basis – the interests of investors and lenders are protected.

Term

What are the main sections of a 10-K?

Definition

In a 10-K, you'll find the three core financial statements, which are the income statement, cash flow statement, and balance sheet. There'll also be a statement of shareholders’ equity, a statement of comprehensive income, and supplementary data and disclosures to accompany the financials.

Term

What is the difference between the 10-K and 10-Q?

Definition

10-K: A 10-K is the annual report required to be filed with the SEC for any public company in the U.S. The report is comprehensive and includes a full overview of the business operations, commentary on recent performance by management, risk factors, disclosures on changes in accounting policies – and most importantly, the three core financial statements with supplementary data. 10-Q: A 10-Q refers to the quarterly report required to be filed with the SEC. Compared to the 10-K, this report is far more condensed in length and depth, with the focus being on the quarterly financials with brief sections for MD&A and supplementary disclosures. Additional Differences: A few more differences are 10-Ks are required to be audited by an independent accounting firm, but 10-Qs are only reviewed by CPAs and left unaudited. 10-Ks must also be filed ~60-90 days after the fiscal year ends, whereas 10-Qs must be submitted ~40-45 days after the quarter ends.