GAAP. FASB. AICPA. APB. If you studied accounting formally, the first few pages of your textbook typically listed a set of acronyms that would make your eyelids flutter. The Financial Accounting Standards Board, the American Institute of CPAs, the Accounting Principles Board, etc. Buncha old (white) guys doing boring talking, as my son used to describe it. Except that what these guys do (and a handful of gals*) is remarkable. Because they set the standards for every other company in the United States.
GAAP stands for Generally Accepted Accounting Principles, and it’s the prodigious set of rules that dictate how businesses should report their financial results. FASB is an independent group, elected from the community of practicing accountants. That means accountants are part of a guild.
G is also for Guild
If you remember your history of guilds, they arose in the Middle Ages as artisans developed their crafts and wanted to set their product standards. Rules were developed for certification to become part of the guild, and the guild stamp of approval reflected its authenticity and craftsmanship.Continue reading “G is for GAAP”