GAAP, FASB Codification - CPA FAR Review

• Report rights infringement
• published: 16 May 2014
• views: 3617

Also available on: http://faithfulrunneredu.blogspot.com/2016/01/gaap-fasb-codification-cpa-far-review.html What is the composition of GAAP? Principles, methods, and procedures that are generally accepted by the accounting profession Majority of GAAP pronouncements are issued by which organization(s)? Principles, methods, and procedures that are generally accepted by the accounting profession Majority of GAAP pronouncements are issued by which organization(s)? * Committee on Accounting Procedure (CAP) * Accounting Principles Board (APB) * Financial Accounting Standards Board (FASB) What is the sole source of authoritative U.S. GAAP for nongovernmental entities, except for SEC guidance? The FASB Accounting Standards Codification How many levels of hierarchy does the Codification have? * One level * There is no hierarchy for GAAP What are the nonauthoritative GAAP? Accounting and financial reporting practices EXCLUDED from the Codification. What is the purpose of the Codification? To compile GAAP in an structured electronic form, organized by major area and topic. What does the Codification exclude? * Other Comprehensive Basis of Accounting * Cash Basis * Income Tax Basis * Regulatory Accounting Principles * NOT limited to above __________________________________________________________________________________________________________________________________ Why Ford Is A Solid Investment x-men days of future past trailer __________________________________________________________________________________________________________________________________ Financial accounting and reporting is concerned with providing relevant information to investors and creditors (and other parties) for the purpose of making informed resource allocation decisions. These decisions are, in the main, whether to invest in a firm or to lend money to it. Financial information is disseminated in many forms including news releases, prospectuses for future securities offerings, filings with the Securities and Exchange Commission (SEC), and annual reports to shareholders. Financial statements are the culmination of the accounting process and represent the most comprehensive financial information disclosures made by firms. The footnotes and other textual and tabular information provide supplementary information and help to explain the amounts disclosed in those statements. To ensure that financial reporting meets these objectives, a set of reporting rules called GAAP has been created. GAAP primarily address three aspects of financial reporting. GAAP affects what is disclosed in financial statements and in what amount. For example, GAAP requires that many assets be reported at their historical cost, rather than at current market value. Without a relatively uniform set of GAAP, business entities would be free to report whatever amounts they desired. The FASB is currently the standard-setting body in the United States. The Securities and Exchange Commission (SEC) is the federal government agency that administers the securities laws of the U.S. These laws affect firms that issue debt and equity securities to the public. Such firms register with the SEC and are called "registrants." The financial statements of these firms must be filed with the SEC and must be audited by independent third parties (CPA firms). The American Institute of Certified Public Accountants (AICPA) is the national professional organization for practicing CPAs and has had a great impact on accounting principles over the years. The mission of the AICPA is to provide its members with resources, information, and leadership so that they may in turn provide valuable services for the benefit of their clients, employers, and the general public. The FASB is one of three parts of the current accounting standard-setting mechanism in the U.S. The other two are the Financial Accounting Foundation (FAF) - the parent body, and the Financial Accounting Standards Advisory Council (FASAC): 1. FAF - appoints the members of the FASB and its advisory councils, ensures adequate funding for the FASB, and exercises oversight over the FASB. Funding sources include fees levied on publicly traded firms under the Sarbanes-Oxley Act, contributions, and publication sales. The trustees of the FAF are appointed from organizations with an interest in accounting standards. 2. FASB - establishes financial accounting standards for business entities. The FASB is an independent body, subject only to the FAF. 3. FASAC - provides guidance on major policy issues, project priorities, and the formation of task forces. Former East German First Lady Margot Honecker Dies in Chile