Generally Accepted Accounting Principles (United States)

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Generally Accepted Accounting Principles , also called GAAP or US GAAP , are the accounting standards adopted by the US Securities and Exchange Commission (SEC). While the SEC has previously stated that they intend to move from US GAAP to the International Financial Reporting Standards (IFRS), the latter is very different from GAAP and progress has been slow and uncertain. Recently, the SEC has acknowledged that there is no further incentive to move more US companies to IFRS so that both standard devices will "continue to co-exist" for the foreseeable future.

The Financial Accounting Standards Board (FASB) has issued US GAAP in Extensible Business Reporting Language (XBRL) beginning in 2008.

Video Generally Accepted Accounting Principles (United States)

History

Auditors take a leading role in developing GAAP for business enterprises.

Accounting standards have been historically established by the American Institute of Certified Public Accountants (AICPA) subject to the Securities and Exchange Commission regulations. AICPA first created the Accounting Procedure Committee in 1939 and replaced it with the Board of Accounting Principles in 1959. In 1973, the Accounting Principles Board was replaced by the Financial Accounting Standards Board (FASB) under the supervision of the Financial Accounting Foundation with the Financial Accounting Standards Advisory Board responsible for provide advice and provide input on accounting standards. Other organizations involved in setting accounting standards of the United States include the Government Accounting Standards Board (GASB), established in 1984; and the Federal Accounting Standards Advisory Board (FASAB), formed in 1990.

Around 2008, the FASB issued the Codification of Accounting Standards FASB, which reorganized thousands of US GAAP statements into about 90 accounting topics.

In 2008, the Securities and Exchange Commission issued an initial "road map" that could lead the United States to ignore the Generally Accepted Accounting Principles in the future, and to join more than 100 countries worldwide instead of using Financial Reporting International based in London. Standard. In 2010, a convergence project is underway with regular FASB meetings with the IASB. The SEC declares its goal to fully adopt the International Financial Reporting Standards in the US in 2014. With the convergence of US GAAP and the international IFRS accounting system, as the highest authority on the International Financial Reporting Standards, the International Accounting Standards Board is becoming more important in the United States.

Maps Generally Accepted Accounting Principles (United States)

Basic purpose

Financial reporting should provide information that:

• Useful to present to potential investors and creditors and other users in making rational investments, credits and other financial decisions
• It is useful to present to potential investors and creditors and other users in assessing the amount, timing, and uncertainty of prospective cash receipts about economic resources, claims on those resources, and changes therein
• Helpful for making financial decisions
• Helpful in making long-term decisions
• Helpful in improving business performance
• Useful in maintaining recordings

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Basic concepts

To achieve basic goals and apply fundamental qualities, GAAP has three basic assumptions, four basic principles, and five basic constraints.

Assumption

• Enterprise: This business is separate from its owner and other businesses. Revenue and costs should be kept separate from Personal expenses
• Monetary Unit: A stable currency is a record unit. The FASB receives the US Dollar nominal value as a unit of monetary note, which is not adjusted for inflation.
• Periodicity: The economic activities of an enterprise can be divided into artificial periods of time.
• Survival Survival: Continuation of the entity as survival is considered.

Principles

• Historical cost principle: The company must calculate and report on the cost of assets and liabilities rather than its fair market value. This principle provides reliable information (eliminating the opportunity to provide a subjective and potentially biased market value), but not particularly relevant. Thus there is a tendency toward fair value use. Most debt and securities are now reported at market value.
• The principle of revenue recognition: The company should record earnings when received but not when received. Cash flow has nothing to do with income recognition. This is the essence of accrual basis accounting. On the contrary, however, losses must be recognized when the event becomes possible, whether it really happens or not. This corresponds to the conservatism constraint, but makes it contradict the consistency constraint, in this case reflects the inconsistent income/profit in the way in which the loss is reflected.
• Matching principle: Spending should be matched against revenue as long as it makes sense to do so. Expenditures are not recognized when work is done, or when a product is produced, but when the job or product actually makes its contribution to revenue. Only if there is no relationship to the revenue that can be established, the cost may be charged as the cost in the current period (eg office salary and other administrative fees). This principle enables greater evaluation of profitability and performance (showing how much is spent on earning). Depreciation and Cost of Goods Selling is a good example of applying this principle.
• The principle of full disclosure: The amount and type of information disclosed should be decided on the basis of a trade-off analysis as more information costs have to be prepared and used. The information disclosed should be sufficient to make an assessment while keeping costs reasonable. Information is presented in the main section of the financial statements, in the notes or as additional information

Limitations

• Objectivity Principle : The company's financial statements provided by the accountant must be based on objective evidence.
• The principle of materiality : the significance of an item should be considered when it is reported. Items are considered significant when it will affect a reasonable individual decision.
• Principle of consistency : This means that the company uses the same accounting principles and methods from time to time.
• The principle of conservatism : when choosing between two solutions, less favorable solutions are the solutions to be chosen (see conservatism convention)
• Cost Limit : The benefit of reporting financial information should be justified and greater than the cost charged to supply it.

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Required departure from GAAP

Under the AICPA Professional Code of Conduct pursuant to Rule 203 - Accounting Principles, members must depart from GAAP if following it will lead to material misstatements on financial statements, or otherwise misleading. In the departure, members must disclose, if practicable, the reason why compliance with accounting principles will result in misleading financial statements. Under Rule 203-1-Departure of Existing Accounting Principles, departures are rare, and usually occurs when there are new laws, the evolution of new forms of business transactions, unusual levels of materiality, or the existence of conflicting industrial practices.

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Engage in development

In the United States, GAAP originated, in order of importance, from: publish from an authoritative body appointed by the American Institute of Certified Public Accountants (AICPA) Council (for example, Statement of Financial Accounting Standards Board, AICPA Accounting Principles Board Opinions, and AICPA Accounting Research Bulletin);

other AICPA publications such as the AICPA Industry Guide;

industrial practices; and

to the para-accounting literature in the form of books and articles.

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Codification in Accounting - FASB Accounting Standard Codification

This codification is effective for the interim and annual periods ending September 15, 2009. All existing accounting standard documents are superseded as described in FASB Statement. 168, Codification of Accounting Standards FASB and Accounting Hierarchy Principles Generally Accepted. All other accounting literature not included in the Codification is not authoritative.

This codification reorganizes thousands of US GAAP statements to about 90 accounting topics and displays all topics using a consistent structure. It also includes the relevant Securities and Exchange Commission (SEC), a guide that follows the same topical structure in a separate section of the Codification.

To prepare users for change, AICPA has provided a number of training tools and resources.

While Codification does not change GAAP, it introduces a new structure - set in an easy-to-use and easy-to-use online research system. FASB expects that the new system will reduce the amount of time and effort required to examine accounting issues, reduce the risk of non-compliance with standards through increased literacy uses, provide accurate information with real time updates as new standards are released, and assist the FASB with the necessary research efforts during the process standard setting.

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See also

src: www.sec.gov

Note

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External links

• SEC Accounting Bulletin - United States
• Division of SEC Corporate Finance - United States
• Website of Financial Accounting Standards (FASB) - United States
• Government Accounting Standards Web Site (GASB) - United States
• US GAAP XBRL Taxonomy - United States

Source of the article : Wikipedia