Generally Accepted Accounting Principles (GAAP) is a set of accounting principles supported and adhered to by the accounting profession’s authoritative bodies. These authoritative bodies promulgate individual principles that become part of the GAAP. A summary of the professional bodies that established GAAP are as follow:
1. The Committee on Accounting Principles (CAP). This organization published Accounting Research Bulletins (ARB) from 1939 to 1959. These bulletins were used to determine GAAP during that period.
2. Accounting Principles Board (APB). This organization published series of the Accounting Principles Board Opinions (APBO) and the APB Interpretations from 1959-1973. These opinions and interpretations were used to determine the GAAP during that perod.
3. Financial Accounting Standards Board (FASB). This organization establishes GAAP from 1973 to present. It regularly issues the Statement of Financial Accounting Standards (SFAS). These statements established the GAAP. From time to time FASB also issue FASB Interpretations to clariffy and further explain a particular SFAS. There are also instances when related SFAS are not well understood interms of its application. To address this issue, FASB issue Techinical Bulletins. In addition to the SFAS, FASB also issue Statements of Financial Accounting Concepts (SFAC) to explain the main idea behind the issued SFAS. Due to advances and continous changes in various business industries, there are specialized industries that may have peculiar accounting needs. This are further explained by FASB in their Emerging Issues Task Force Statements (IEFT). From time to time, the accounting profession may request for clarifications and answers to specific accounting priciples. FASB answers these queries through the FASB Imprelemtation Guides.
Framework Underlying Financial Accounting. Acceptance of the principles issued by the above bodies are based on their hierarchy and level of authority. It is ranked as follow:
Accounting Research Bulletins
Accounting Priciples Board Opinions
FASB Staff Positions
FASB Statement 133 Implementation Issues
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