Explaining Basic Accounting Concepts And Business Structures

853 Words Sep 14th, 2014 4 Pages
Explaining Basic Accounting Concepts and Business Structures
By: Jennifer Powell

Topic 1: Identify and describe the sources of generally accepted accounting principles. Identify source hierarchy and explain why the hierarchy is important. Generally Accepted Accounting Principles (GAAP), are guidelines that allow each accountant supervision upon financial reporting. It stimulates a cohesive environment to comprehend all aspects of finances in various business. The standard that FASB has worked identifies the sources of accounting principles and the blueprint for choosing which principle to use in the preparation of financial statements. According to Intermediate Accounting Wiley, the standard categorizes the major sources of GAAP consist of: FASB Standards, Interpretations, and Staff Positions; APB Opinions; and AICPA Accounting Research Bulletins. The sources of principles are as follows in descending order of hierarchy:
The opinions of FASB Statements of Financial Accounting Standards and Interpretations, Statement 133 Implementations Issues, and Staff Positions; along with the American Institute of Certified Public Accountants (AICPA) Research Bulletins and Accounting Principal Board are not superseded by the actions of FASB.
FASB Technical Bulletins and AICPA Industry Audit and Accounting Guides and Balance Sheet Statements if cleared by FASB.
Consensus positions of FASB Emerging Issues Task Force (EITF), and topics discussed in Appendix D of EITF Abstracts; AICPA…
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