FASB (Financial Accounting Standards Board)

Definition

The Financial Accounting Standards Board (FASB) is an independent organization responsible for establishing and improving financial accounting and reporting standards in the United States. These standards are known as Generally Accepted Accounting Principles (GAAP).

5 Must Know Facts For Your Next Test

1. FASB issues statements of financial accounting standards that guide the preparation of financial statements, including the Statement of Cash Flows.
2. The FASB's mission is to ensure that financial reporting provides useful information to investors and other users.
3. FASB updates GAAP through Accounting Standards Updates (ASUs), which may affect how cash flows are reported.
4. FASB's conceptual framework serves as a foundation for creating consistent and comparable financial statements.
5. The FASB operates under the oversight of the Financial Accounting Foundation (FAF), ensuring independence and accountability.

Review Questions

• What role does FASB play in establishing financial accounting standards?
• How does FASB influence the preparation of the Statement of Cash Flows?
• What is an Accounting Standards Update (ASU) issued by FASB?

Related terms

GAAP: Generally Accepted Accounting Principles are a set of rules and standards used in financial reporting.

Statement of Cash Flows: A financial statement showing how changes in balance sheet accounts and income affect cash and cash equivalents.

Accounting Standards Update (ASU): Official updates issued by FASB that modify or clarify GAAP.