Financial Accounting and Reporting (FAR) Overview and Standard Setting

Vocabulary flashcards covering the components of financial accounting and reporting, US standard-setting bodies (SEC, CAP, APB, FASB), the FASB Accounting Standards Codification (ASC), and GAAP versus IFRS convergence.

Financial Accounting

The accounting process covering all financials, which includes recording journal entries, maintaining the ledger, and preparing the trial balance.

Financial Reporting

The preparation of a full set of financial statements, including the Balance Sheet, Income Statement, Statement of Comprehensive Income, Statement of Stockholders' Equity, and Statement of Cash Flows.

Balance Sheet (B/S)

A primary financial statement that reports the financial position of an entity.

Income Statement (I/S)

A primary financial statement that presents the statement of earnings.

US GAAP

Generally Accepted Accounting Principles; the framework under which financial statements are prepared in the United States.

Securities and Exchange Commission (SEC)

The governing body established in 1934 to manage the US capital market; holds statutory authority to establish US GAAP, possesses power to delegate rulemaking to the accounting profession, and regulates all companies issuing securities in the US.

Regulation S-K

An SEC pronouncement outlining disclosure rules outside of the primary financial statements.

Regulation S-X

An SEC pronouncement establishing rules and requirements for financial statement disclosure.

Committee on Accounting Procedure (CAP)

A part-time committee of the AICPA that issued Accounting Research Bulletins (ARBs) and determined GAAP from 1939 to 1959.

Accounting Principles Board (APB)

A part-time committee of the AICPA that issued APB Opinions and Interpretations, determining GAAP from 1959 to 1973.

Financial Accounting Standards Board (FASB)

A full-time independent standard-setting organization created in 1973 that determines GAAP and, through 2009, issued Statements of Financial Accounting Standards (SFAS), Interpretations, Technical Bulletins, and Staff Positions.

Emerging Issues Task Force (EITF)

A task force established by the FASB in 1984 to assist with timely financial reporting issues.

Accounting Standards Codification (ASC)

A single restructured source created by the FASB in 2009 that organized (without changing) thousands of GAAP pronouncements into approximately 90 topics, creating a single level of GAAP hierarchy.

Authoritative GAAP

The body of accounting guidance incorporated directly into the FASB ASC, including FASB SFAS, Interpretations, Technical Bulletins, Staff Positions, CAP Accounting Research Bulletins, APB Opinions, and EITF releases.

Non-Authoritative GAAP

Accounting literature not incorporated into the ASC, including FASB Statements of Financial Accounting Concepts (SFAC) and non-incorporated SEC pronouncements.

Statements of Financial Accounting Concepts (SFAC)

Conceptual framework documents issued by the FASB that are classified as non-authoritative GAAP and omitted from the ASC.

International Accounting Standards Board (IASB)

The international standard-setting body responsible for issuing International Financial Reporting Standards (IFRS) used globally outside the US.

Rule-Based Approach

The structural approach and characterization applied to US GAAP.

Principle-Based Approach

The structural approach and characterization applied to IFRS.

October 2002 Memorandum of Understanding (MoU)

An agreement announced between the FASB and IASB representing a mutual commitment to converge US GAAP and IFRS.