Question 11Q - Intermediate Accounting (Kieso)

Question

Distinguish between Opinions of the Accounting Principles Board and Accounting Standards Updates.

Step-by-Step Solution

Answer

Accounting Principle Board’s official pronouncements are called Accounting Principle Board Opinions and are considered to be based primarily on research studies and be guided by reason and analysis. On the other hand, Financial Accounting Standards Board (FASB) issues Accounting Standards Updates (ASU) to convey changes to the FASB Codification, consisting of changes to non-authoritative SEC content.

Meaning of Accounting Standards

Accounting standards are generally accepted accounting principles that provide the basis for accounting policies and for the preparation of financial statements.

The objective of these standards is to provide uniformity in financial reporting and to ensure consistency and comparability of the information provided by the business firms. It provides useful information to the users to interpret published reports.

Difference between Opinions of the Accounting Principles Board and Accounting Standards Updates

The Accounting Principle Board issued accounting Principle Board Opinions during 1959, replaced by Financial Accounting Standards Board (FASB) Statements, identified as accepted practice and comprise the requirements to be adhered to by all the business firms. At the same time, Accounting Standards Updates are pronouncements of the Financial Accounting Standards Board that are consolidated into the FASB codification and thus indicate the accounting profession’s authoritative pronouncements on accounting and reporting practices.