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Governmental Accounting Standards Board (Gasb) and Financial Accounting Standards Board (Fasb( Analysis Paper

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Governmental Accounting Standards Board (GASB) and Financial Accounting Standards Board (FASB) Analysis Paper
Accountants or individuals, who put the financial statements together, need the knowledge of the two different accounting standards board. The Governmental Accounting Standards Board (GASB) and the Financial Accounting Standards Board (FASB) differ from each other and are similar in different ways and individuals need knowledge of the differences and similarities. GASB and FASB allow use of the modified accrual basis of accounting or the full accrual accounting for government and not-for-profit organizations. Knowing the differences between the two methods and the meaning are important.
GASB and FASB Similarities
GASB and FASB accounting are sets of objectives that proprietorship, government, and not-for-profit organizations follow in preparing financial statements. According to Weygandt (2008, p. 17) “both the GASB and the FASB have established objectives that circumscribe the functions of financial reports.” GASB and FASB objectives show whether a company is making enough profit to pay for expenses throughout the year, allows investors information to decide whether to invest or not, and how well the company budget complied throughout the year. Also, the two accounting standard boards show whether management is complying with all aspects of the objectives. GASB and FASB accounting have differences that individuals need knowledge about to prepare financial statements for government and not-for-profit organizations.
GASB and FASB Differences
Accountants and individuals, who work in accounting fields, need to know the differences between GASB and FASB. Knowing the differences allows individuals to know what objectives apply in their organization. One difference between GASB and FASB according to Jacobsen and Wachterhauser (2011) “is the general audience for which each accounting standard is intended for.” GASB reports to interested individuals, whereas FASB reports any activity to shareholders, vendors, investors, and even SEC if publically traded according to Jacobsen and Wachterhauser (2011). Another difference the government organizations follow GASB and not-for-profit organizations follow FASB. FASB deals with the budgetary compliance for these organizations. FASB and GASB allow two methods of accrual accounting methods to be used.
Difference between Modified Accrual Basis and Full Accrual Accounting
Accountants and individuals working in organizations need to know the difference between the modified accrual basis and the full accrual accounting. According to WebFinance, Inc. (2011) the definition of accrual basis accounting is “a system of accounting based on the accrual principal, under which revenue is recognized (recorded) when earned, and expenses are recognized when incurred.” Full accrual basis accounting follows generally accepted accounting principles (GAAP) in preparing financial statements. Most company’s follow the full accrual accounting method while preparing financial statements. According to WebFinance, Inc. (2011) the definition of modified accrual basis accounting is the “method under which revenues are recognized in the period they become available and measurable, and expenditures are recognized in the period the associated liability is incurred.” Modified accrual basis accounting deals with short-term assets and liabilities, which is the difference between full accrual accounting.
Conclusion
Accountants and individuals need knowledge of the objectives of GASB and FASB and what type of organization the standards pertain, whether not-for-profit or government organization. Knowing the difference between GASB and FASB helps understand the requirements needed for organizations to follow. Accountants and individuals need knowledge of the differences between modified accrual basis and the full accrual accounting.

References:
Jacobsen & Wachterhauser. (2011). Government and not-for-profit accounting. Retrieved on May 9, 2011 from http://www.phxaccountant.com/government-and-not-for-profit-accounting/2010/06/
WebFinance, Inc. (2011). Accrual basis accounting. Retrieved on May 9, 2011 from http://www.businessdictionary.com/definition/accrual-basis-accounting.html
WebFinance, Inc. (2011). Modified accrual basis accounting. Retrieved on May 9, 2011 from http://www.businessdictionary.com/definition/modified-accrual-basis-accounting.html
Weygandt, J.J. (2008). Financial Accounting (6th Ed.). Hoboken, NJ: John Wiley & Sons.

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