Understanding GAAP in the US
Who sets United States generally accepted accounting principles and how the Codification is organized; GAAP definitions; qualitative characteristics used to judge whether reported information is useful.
This meeting traces US reporting authority, shows how to navigate the Codification, and applies advertising guidance to a production cost. It then uses WorldCom to examine how reported profit and assets affect investors and lenders.
- Date
- Thu 9/1080 minutes
- Reading
- Chapter 4: Which accounting source governs, and how do you apply it? (read by next class) Optional Kieso equivalent: Chapter 1, sections 1.1-1.2, pages 1-2 through 1-18
- Engagement points
- Scored5 points for answering at least 75%
Slides and downloads
View the slides online, or download the PDF for offline reading or printing.
Watch this meeting
Lecture playlist Subscribe on YouTube
The slides of this meeting's deck, each held for as long as the narration over it runs. Read by a speech synthesizer; every line was transcribed back and checked against its script before it was kept.
What to do before class
- Bring a laptop so you can open and verify a Codification location.
What we will do in class
- Connect the accounting cycle to the need for shared reporting rules.
- Distinguish reporting roles, authoritative sources, and the Framework.
- Navigate the ASC and check whether a search result applies.
- Research advertising costs through scope, policy, dates, and disclosure.
- Explain how WorldCom reporting could affect investors and lenders.
Assigned reading and deadlines
Solutions to the in-class problems post to D2L after the meeting.
- Read Chapter 4: Which accounting source governs, and how do you apply it? after this meeting and before the next class.
- Complete the Unit 1 review assignment by Wednesday, September 16 at 11:59 PM (extended deadline).
Practice and review
You do not have to complete or submit these items. They do not affect your grade.
- Read Kieso Chapter 1, sections 1.1 through 1.2, pages 1-2 through 1-18, if you want another explanation.
Lessons, examples, and references
Complete the assigned reading first. Open a link below when you need a definition, another explanation, or more practice.
Lessons
- Who has authority, and where do you research it?
Find the source that governs an accounting question, read a Codification citation, and check whether the guidance applies to the company's facts.
- How does the FASB use the Conceptual Framework?
See how the FASB uses a shared set of concepts to develop standards, and why those concepts do not replace the Codification.
Concepts used
Background
Practice Chapter 4 by topic
Use one page for reporting purpose, accounting authority, and information quality. Each question includes an explanation or worked answer.