Maire Loughran - Financial Accounting For Dummies

Accounting and reporting for not-for-profits are topics outside the scope of this book, and you won’t be tested on it in your financial accounting course. The only takeaway you need to have is that not-for-profits use fund accounting. For example, donations to neuter shelter animals go into a restricted fund to be used for that purpose only. Not-for-profits generally do not report net income.

In the past, establishing and modifying GAAP were collaborative efforts among several different standard-setting bodies: the FASB, the EITF, and the AICPA. At the AICPA, this task fell specifically to the Financial Reporting Executive Committee (FinREC), which is a senior technical committee composed of a Chair and 15 members.

But hold onto your hats! How financial accountants view GAAP changed in 2009 with the adoption of FASB Accounting Standards Codification. As of July 1, 2009, the FASB Accounting Standards Codification (ASC) became the single source of non-governmental authoritative GAAP in the United States. Before you get in a dither, keep in mind that the ASC doesn’t change GAAP; the FASB didn’t rewrite all the accounting rules as of July 1, 2009. Instead, the ASC organizes GAAP in a more user-friendly fashion and (mercifully) uses a consistent format across the board for all GAAP topics.

The FASB allows free, limited access to the Accounting Standards Codification. To check it out, go to http://asc.fasb.org /. Look for “Go to Codification” on the home page, confirm that you aren’t a robot and click Access Basic View. Finally, accept the Basic View Licensing Agreement to access your free view.

After you complete that log-in procedure, on the Basic View home page you can browse the topics on the left-hand task bar to see how to apply GAAP for accounting topics such as revenue (which I discuss in Chapter 10of this book), assets, liabilities and equity (which I discuss in Part 3), and presentation (see Chapters 15and 16). Each topic allows you to drill down to more detailed information. For example, if you select “Equity,” you can further select “Treasury Stock” (which I explain in Chapter 9) to find out how to account for treasury stock under GAAP.

The ASC professional version annual subscription costs $1,086. Ask your financial accounting instructor if your school has academic accounting access. If so, you’ll have free access to better search functions that allow for a fully functional view of the codification.

Part 2

IN THIS PART …

Dig into collecting, sorting through, and entering accounting data into business accounting software.

Get a primer on the difference between the cash and accrual methods of accounting.

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