Definition
The Financial Accounting Standards Board, or FASB, is an independent, non-profit organization which establishes the financial accounting standards used by companies in the preparation of financial reports.
Explanation
Generally Accepted Accounting Principles, or GAAP, is a set of standards used by companies in the preparation of financial statements such as the balance sheet, income statement, and statement of cash flows. The standards established by the Financial Accounting Standards Board are deemed as authoritative to agencies such as the Securities and Exchange Commission.
The FASB has been establishing accounting standards since 1973. The process begins with a research effort that involves an accounting issue, and ends with an authoritative statement that outlines the proper reporting of this financial information.
The creation of standards and guidelines ensures consistent information is reported, which provides the users of financial reports with actionable information. The FASB works in conjunction with a number of independent business and professional organizations, including the Financial Accounting Foundation (Foundation), the Financial Accounting Standards Advisory Council (FASAC), the Governmental Accounting Standards Board (GASB), and the Governmental Accounting Standards Advisory Council (GASAC).
Related Terms
The income statement is a financial accounting report that demonstrates how net income, or profit, is derived from revenues. The main categories appearing on an income statement include revenues, cost of goods sold, operating expenses, non-recurring items and net income.
Moneyzine EditorNovember 6th, 2024
Also known as a statement of financial position, the balance sheet is used to show the financial health of a company at a particular point in time. The balance sheet consists of assets, liabilities, and owner's equity in the company. It is one of the four key financial statements issued by public companies.Moneyzine EditorNovember 6th, 2024
The term Generally Accepted Accounting Principles, or GAAP, is used to describe a set of guidelines, accounting rules, techniques and frameworks utilized in the preparation of a company's financial statements.Moneyzine EditorJanuary 19th, 2024
The term Accounting Standards Pronouncements refers to a hierarchy of communications from the Financial Accounting and Standards Board. Generally, these pronouncements consist of Accounting Standards Updates, Statements of Financial Accounting Concepts, and "other" communications.Moneyzine EditorNovember 6th, 2024
