Intermediate Accounting

Intermediate Accounting and Financial Accounting

This paper will identify and describe the sources of generally accepted accounting principles and identify source hierarchy and explain why the hierarchy is important. Next a description for effective accounting information using the qualities of accounting information from the readings will be discussed. The paper will cover the description on how an accrual- based accounting system is different from a cash basis of accounting. Final, a description of the types of business structures and the defining features of each structure will be discussed.

Identify and describe the sources of generally accepted accounting principles. Identify source hierarchy and explain why the hierarchy is important

General accepted accounting principles (GAAP) are a set of rules and practices, acquiring substantial authoritative support that the accounting profession recognizes as a general guide for financial reporting purposes (Kieso, Kimmel, & Weygandt, Tools for Business Decision Making, 2007). The sources of generally accepted accounting principles are FASB which are responsible for issuing FASB Statements of Financial Accounting Standards, Interpretations, and Technical Bulletins, the American Institute of Certified Public Accountants (AICPA) issues Statements of Position, Audit and Accounting Guides, and Practice Bulletins, and the FASB Emerging Issues Task Force (EITF) issues EITF Abstracts (Generally Accepted Accounting Principles).

The GAAP source hierarchy inclusive of four successive categories (A-D). Category A consists of FASB statements of Financial Accounting Standards, FASB Interpretations, APB Opinions, and AICPA Accounting Research Bulletins (Generally Accepted Accounting Principles). This hierarchy is important because if there is a conflict between accounting principles relevant to the circumstances from one or more sources in Categories A, B, C, or D, the treatment specified by the source in the higher category...