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Financial Accounting Standards Board

Essay by   •  February 20, 2014  •  Essay  •  342 Words (2 Pages)  •  1,117 Views

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To put simply, the Financial Accounting Standards Board (FASB) Codification system is a large-scale database that brings together all of the authoritative resources and guidelines about accounting standards and places them in an easy to use system. According to "FASB Accounting Standards Codification" (n.d.), "The Codification contains the authoritative standards that are applicable to both public nongovernmental entities and nonpublic nongovernmental entities." The Codification is used by accountants and reporting officials; in addition to investors and analysts, they are able to quickly and efficiently access the information appropriate for their particular research.

The purpose "is to establish the FASB Accounting Standards Codification as the source of authoritative principles and standards recognized by the FASB to be applied by nongovernment entities in the preparation of financial statements in conformity with generally accepted accounting principles (GAAP)." It is was designed to make life easier for the interested parties conducting research and include all the accounting standards in one simple database so everyone involved is getting the same information.

There are nine content areas located in the FASB Codification System: General Principles, Presentation, Assets, Liabilities, Equity, Revenue, Expenses, Broad Transactions, and Industry. Under the general principles tab is everything that an individual would need to know about GAAP. Clicking on the second tab information can be found on the presentation of financial statements to include, balance sheet, statement of shareholder equity, comprehensive income, income statement, etc. The asset content area contains information on anything and everything involving cash and cash equivalents, receivables, investments, inventory, other assets and deferred costs, intangibles, property, plant, and equipment. The liabilities tab is very informative because not only can you find information about liabilities but you can learn about asset retirement and environmental obligations, exit or disposal cost obligations, deferred revenue, commitments, contingencies, guarantees, debt, and how to distinguish liabilities from equity. When an individual needs to learn more about expenses, the codification contains the accounting standards for cost of sales and services, compensation, other expenses, research and development, and income taxes.

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