Basic Accounting Concepts

Basic Accounting Concepts and Business Structures

Sources of GAAP

The sources of GAAP standards have been provided by the Securities and Exchange Commission (SEC), American Institute of Certified Public Accountants (AICPA), Financial Accounting Standards Board (FASB) along with its predecessor the Accounting Principle Board (APB), and Governmental Accounting Standards Board (GASB).

FASB Pronouncements

“FASB statements are considered GAAP and thereby binding in practice.” (Kieso, 2007) FASB Standards, Interpretations, and Staff Positions are considered among the most authoritative sources for accounting practices. Emerging Issues Task Force Statements are also a respected source for preferred accounting and typically address more short-term issues. In the past, FASB issued FASB Technical Bulletins. These have been replaced by Staff Positions, but continue to provide guidance.

APB Opinions

The APB issued 31 opinions before it was dissolved in 1973. Their work was supported by research and analysis, and continues to support accounting theory today.

AICPA Accounting Research Bulletins

“The Committee on Accounting Procedure (CAP), composed of practicing CPAs, issued 51 Accounting Research Bulletins during the years 1939 to 1959”. (Kieso, 2007, p. 8) These bulletins each hit on an individual accounting issue, providing specific guidelines.

Hierarchy of Sources

A framework for selecting the source one will use to provide guidance in the preparation of financial statements is a necessary item. FASB has named the above sources and categorized them to provide an outline for research on accounting issues (Kieso, Weygandt, & Warfield, 2007).

Category A | FASB Standards, Interpretations, and Staff positions | APB Opinions | AICPA Accounting Research Bulletins |

Category B | FASB Technical Bulletins | AICPA Industry Audit and Accounting Guidelines | AICPA Statements for Position |

Category C | FASB Emerging Issues Task Force | AICPA AcSEC...