¶ … FASB and GASB Accounting
Compare and contrast FASB and GASB accounting. Explain the objectives of the two standards boards and how they are similar and different. Describe how the modified accrual basis of accounting differs from full accrual accounting
The FASB and GASB share similar objectives by focusing on improving transparency and reporting standards. This is important, because both are used as way of providing the most accurate information to the general public. To fully understand how this occurs requires looking at the two approaches and comparing them with one another. Once this takes place, is when there will be an examination of the modified accrual basis methodology vs. The full accrual approach. This is when we can offer specific insights about how these standards are similar and different.
A Comparison of FASB and GASB Standards
The Financial Accounting Standards Board (FASB) was founded in 1973. Its purpose was to create a universal set of standards for American businesses to follow when reporting their earnings. A few of the most notable include: accounting for nonprofit mergers / acquisitions, financial guarantee insurance contracts and hedging. This is important, because it is showing how this basic approach is attempting to improve transparency based on using conservative accounting principles (i.e. taking write downs against earnings and carrying forward less income). ("Facts about FASB," 2012) ("Financial Standards Accounting Board," 2011)
The Governmental Accounting Standards Board (GASB) is an offshoot...
GASB Up until the early 1980s, state and local governments followed disparate financial policies and systems. The problem began receiving attention in the late 1970s because of New York City's financial crisis. As a result, many began calling for the creation of an oversight body for state and local governments similar to the private sector's Financial Accounting Standards Board (FASB) ran under the Financial Accounting Foundation (FAF). In 1984, the FAF
Accounting Principles To expressly explain the similarities and differences that exist between the GASB and FASB accounting standards it is imperative that we first examine the philosophical approaches that the boards have taken (Marsh & Fischer, 2011). These are found in the board's concept statements. The boards use the concept statements to develop accounting standards. The FASB conceptual framework focuses on provision of best information that influences decisions made by creditors,
Value of Accounting Standards Accounting rules are designed to serve the capital markets and make these markets work efficiently. Accounting rules are essential to the efficient functioning of the economy because decisions about the allocation of resources rely heavily on credible, concise, transparent and understandable financial information. Without standard measures of the worth of a company, lenders and investors would have no way in which to evaluate the worth of
As opposite, in private sector accounting (for the purpose to improve the financial position of the company) the sales are recognized when the products or services have been rendered and the payment has been received or is expected to be received in a very short time. The costs are recognized as deduction from income if there is a subjective view that these costs are to lead to future income
Some mergers and acquisitions (M&as) did not generate any goodwill because they were accounted for using the pooling-of-interests method. In 1969, Leonard M. Savoie (then Executive Vice President of the AICPA) stated that he expected the then-prevailing accounting pronouncement authority, the Accounting Principles Board (APB), to abolish the pooling of interests method. However, the death-knell for this accounting method was not sounded until 2001 with the issuance of SEAS
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