The Purpose of the Financial Accounting Standards Board Quizlet

In the United States, accounting standards are established by the Financial Accounting Standards Board (FASB), a nonprofit organization. It was founded in 1973 and is in charge of developing GAAP, or Generally Accepted Accounting Principles. In order for investors to make wise investment decisions, the FASB works to ensure that financial statements are accurate, dependable, and consistent. To assist accounting students and professionals in learning about GAAP, the FASB Quizlet was created. The four GAAP guiding principles—relevance, dependability, comparability, and consistency—are covered by flashcards on Quizlet. These rules serve as the cornerstone of accounting and are employed to guarantee the accuracy and dependability of financial reporting. Relevance: The decision-making process requires that financial information be relevant. It needs to be accurate, full, and timely. Investors can choose to invest in a company with confidence if they have access to relevant information.

Reliability: Financial data needs to be trustworthy. It must be truthful, corroborated, and impartial. Investors can choose to invest in businesses with confidence with the use of trustworthy information. Comparability: It is necessary for financial data to be similar. Investors must be able to compare the financial statements of other companies thanks to the manner it is presented. Comparability aids in the decision-making process for investors when buying stocks in businesses. Consistency: Financial data needs to be consistent. It needs to be presented consistently from one time period to the next. Making consistent choices enables investors to choose firms wisely. The FASB’s mission is to develop and maintain accounting standards to guarantee the accuracy, dependability, and consistency of financial statements. To make sure that financial statements give investors valuable information, the FASB establishes accounting standards. The FASB also strives to lower compliance costs for businesses and increase the effectiveness of financial reporting.

To sum up, the FASB Quizlet is a helpful resource for accounting professionals and students to learn about GAAP. Relevance, dependability, comparability, and consistency are the four tenets of GAAP. The FASB establishes accounting rules to guarantee the accuracy, consistency, and dependability of financial accounts. The FASB seeks to increase the effectiveness of financial reporting and lower compliance costs for businesses.