Financial Accounting Standards Board

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Financial Accounting Standards Board

Financial Accounting Standards Board

FASB Codification System

The economic Accounting measures Board started the Codification System. The Codification Project was a outcome of a 5-year process that involved hundreds of professionals and some accounting boards (Financial Accounting measures Board, p 4, 2009). The Codification System restructured the many topics of US GAAP pronouncements into a consistent structure that accounting professionals use in their daily decisions of a firms financial position (Financial Accounting Standards Board, p 4, 2009). The FASB Codification scheme is the only resource of respected nongovernmental U.S. usually acknowledged accounting values (US GAAP). Any form of accounting literature that is not in the Codification is considered non-authoritative (Financial Accounting Standards Board, p 4, 2009). The three major goals the FASB developed in the publishing of the Codification:

1). The Codification System wanted to simplify the new system so that all users could access the codification system on all the authoritative US GAAP publishing notifications.

2). The Codification System was to endure that the content precisely represented US GAAP as stated in the date of July 1, 2009.

3). The Codification System created an investigating tool that is kept current according to the standards of US GAAP (Financial Accounting Standards Board, p 5,2009).

Purpose of Codification

The purpose of the Codification system states in the three major goals above it gives the accounting professional the tools to look up anything in one place and the accountant will know it is set to the standards of US GAAP. It can be a remarkable tool for the accounting professional to reduce the amount of time and work that involves in the research of an important subject. It provides precise information about the subject updates when new standards are published. Through the updated literature, it can diminish the risk of noncompliance. The Codification system can be a reliable tool for the accounting professional to use in many different subjects and problems that arise in everyday situations.

Content of Codification

The codification system has eight content areas and has an estimated 90 subtopics. The eight main content areas and their associated numbering system are the following:

1) Presentation 200-299

2) Assets 300-399

3) Liabilities 400-499

4) Equity 500-599

5) Revenues 600-699

6) Expenses 700-799

7) Transactions 800-899

8) Industry 900-999

In the eight areas of the codification system there are subtopics that explain the rules and regulations of each subject. The types of pieces that are in the first topic production (200-299) are production of economic declarations, Balance Sheet, Income declaration, money Flow declaration and Notes to the Financial declarations. The second theme Assets (300-399) agreements with matters like Cash, anecdotes Receivables, Investments, Inventory and PPE. The third theme Liabilities (400-499) discusses problems and matters that deal with Liabilities, Asset Retirement, Contingencies, Deferred income and Debt. The fourth theme of Equity (500-599) interprets positions that involve Equity. The fifth theme incomes (600-699) assists accountants interpret Revenue Recognition. The sixth theme of Expenses (700-799) maintains subject issue in the localities of Cost of Sales, reimbursement, R&E and Income ...
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