Accounting Paper

FASB Codification System Orientation

FASB Codification System Orientation

What is the FASB Codification System?

According to FASB (2012), “The FASB Accounting Standards Codification is the source of authoritative generally accepted accounting principles (GAAP) recognized by the FASB to be applied to nongovernmental entities” (FASB Accounting Standards Codification, 2012, p. 4).

In another word, the FASB accounting standards codification is basically a searchable database that will provide information about accounting rules and standards by combining data from different resources, and allow people to search pronouncements from the FASB, Accounting Standards Executive Committee, Emerging Issues Task Force, Accounting Principles Board, and relevant portions issued by the Securities and Exchange Commission faster (American Accounting Association, n.d.).

The Purpose of the FASB Codification System

The main purpose of the FASB Codification System is to reduce the searching time and help clients to search the latest or recently updated accounting standards and rules more efficiently by integrating and synthesizing the existing generally accepted accounting principles (GAAP) instead of creating the new GAAP. The FASB codification system is also intended to decrease the gap between the international accounting standards and FASB (American Accounting Association, n.d.).

The Nine Content Areas Located In the FASB Codification System

The nine content areas which are located in the FASB Codification system are: General Principles, Presentations, Liabilities, Assets, Equity, Expenses, Revenue, Broad transactions and Industry (FASB Accounting Standards Codification, 2012).

The General Principles cover the updates to the GAAP guidelines by identifying the transformation to the accounting standards modifications. The Presentation section gives and discusses the guidance on the preparation of the income statement, the notices for financial verbalizations, and the...