Accounting Principles Quiz

Accounting Principles and Rules Used in the United States:

• Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC) and is the default accounting standard used by companies based in the United States.
• The Financial Accounting Standards Board (FASB) publishes and maintains the Accounting Standards Codification (ASC), which is the single source of authoritative nongovernmental U.S. GAAP.
• The FASB Accounting Standards Codification is the source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities.
• In addition to the SEC's rules and interpretive releases, the SEC staff issues Staff Accounting Bulletins that represent practices followed by the staff in administering SEC disclosure requirements.
• To achieve basic objectives and implement fundamental qualities, GAAP has four basic assumptions, four basic principles, and four basic constraints.
• Under the AICPA's Code of Professional Ethics under Rule 203 – Accounting Principles, a member must depart from GAAP if following it would lead to a material misstatement on the financial statements, or otherwise be misleading.
• The FASB replaced the Accounting Principles Board (APB) in 1973 under the supervision of the Financial Accounting Foundation.
• The FASB created the Emerging Issues Task Force (EITF) in 1984 to assist in improving financial reporting.
• In 2008, the FASB issued the FASB Accounting Standards Codification, which reorganized the thousands of U.S. GAAP pronouncements into roughly 90 accounting topics.
• Other organizations involved in determining United States accounting standards include the American Accounting Association, Institute of Management Accountants, and Financial Executives Institute.
• The FASB began working with the International Accounting Standards Board (IASB) in 2006 to reduce or eliminate the differences between U.S. GAAP and the International Financial Reporting Standards (IFRS), known as the IASB-FASB convergence project.
• As of 2022, the convergence project is coming to an end and no new projects will be added to the agenda.