Accounting Standards in the USA
Accounting in the USA
The following report will describe and discuss the major elements of accounting in the USA. It will show that the US Generally Accepted Accounting Principles (GAAP) are set by the Financial Accounting Standards Board (FASB), where as the International Accounting Standards (IAS) are set by the International Financial Reporting Standards (IFRS). This report will also state the similarities and differences between these standards. In addition, the following report will use relevant examples to evaluate current accounting problems and issues in the USA related to international convergence of accounting standards.
Fargher et al. (2008, page. 67) pointed out that FASB’s conceptual framework (CFW) for financial reporting is generally consistent with that of the International Accounting Standards Board (IASB). However the FASB provides more detail with six statements of financial accounting concepts (SFACs). The first level in the CFW explains the main purposes of financial reports are to provide useful information for investors and creditors, to estimate future cash flows and to claim venture resources. The second level consists of qualitative characteristics and elements of the CFW. The qualitative characteristics of the USA CFW are relevance, reliability, comparability and consistency. The main components include assets, liabilities, equity, investment by owners, distributions to owners, comprehensive income, revenues, expenses, gains and losses. The third level of CFW indicates how the firm executes the events based on assumptions, principles and constraints. There are four assumptions: economic equity, going concern, monetary unit and periodicity. The four principles include historical cost, revenue recognition, matching and full disclosure. The constraints consist of cost-benefit, materiality, industry practice and conservatism.
Fargher (2008, p. 229) mentioned that USA uses FASB 95 Statement of Cash Flows, plus FASB 102 and 104. The
The following report will describe and discuss the major elements of accounting in the USA. It will show that the US Generally Accepted Accounting Principles (GAAP) are set by the Financial Accounting Standards Board (FASB), where as the International Accounting Standards (IAS) are set by the International Financial Reporting Standards (IFRS). This report will also state the similarities and differences between these standards. In addition, the following report will use relevant examples to evaluate current accounting problems and issues in the USA related to international convergence of accounting standards.
Fargher et al. (2008, page. 67) pointed out that FASB’s conceptual framework (CFW) for financial reporting is generally consistent with that of the International Accounting Standards Board (IASB). However the FASB provides more detail with six statements of financial accounting concepts (SFACs). The first level in the CFW explains the main purposes of financial reports are to provide useful information for investors and creditors, to estimate future cash flows and to claim venture resources. The second level consists of qualitative characteristics and elements of the CFW. The qualitative characteristics of the USA CFW are relevance, reliability, comparability and consistency. The main components include assets, liabilities, equity, investment by owners, distributions to owners, comprehensive income, revenues, expenses, gains and losses. The third level of CFW indicates how the firm executes the events based on assumptions, principles and constraints. There are four assumptions: economic equity, going concern, monetary unit and periodicity. The four principles include historical cost, revenue recognition, matching and full disclosure. The constraints consist of cost-benefit, materiality, industry practice and conservatism.
Fargher (2008, p. 229) mentioned that USA uses FASB 95 Statement of Cash Flows, plus FASB 102 and 104. The