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Outline for Basic Accounting Concepts and Business Structures

In: Business and Management

Submitted By sean2339
Words 687
Pages 3
Basic Accounting Concepts and Business Structures
Topic 1
Four organizations are involved in the production of accounting standard: Securities and Exchange Commission (SEC), American Institute of Certified Public Accountants (AICPA), Financial Accounting Standards Board (FASB), and Government Accounting Standards Board (GASB).
SEC
The SEC is a federal organization that helps develop standards for financial information presented to stockholders. SEC requirements are based on FASB and AICPA standard. The SEC believes that the best method of establishing accounting information in through private organizations. The SEC requires registrants to abide by GAAP. The SEC may prevent a company from trading securities on the exchanges if the company is noncompliant to standards.
AICPA
The AICPA is a private organization of accountants that prepares ethical standards for audits of private companies, non-profit organizations and government organizations. It produces Generally Accepted Auditing Standard (GAAS) and is also a contributor to GAAP.
FASB
The FASB is a private organization that develops Generally Accepted Accounting Principles for the United States. It aims to promote standards to assist companies in production of accurate, standard, and explanatory financial statements in the private sector.
GASB
The GASB is structured very similarly to FASB; however, it aims to provide standards for the financial reports of government organizations.
Hierarchy
Because the SEC is a government regulator, its requirements supersede the AICPA and the FASB. Occasionally the SEC requires changes in accounting practices faster than the FASB or AICPA can update GAAP or GAAS respectively. However, the SEC requires publicly traded companies to adhere to GAAP and GAAS. This relationship is important because it allows for high efficiency from the private sector (FASB and AICPA)

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