Welcome back to our Monday Live! Bookkeeping Tips with your Accountant, MJ!

The Story of GAAP: Where Do You Find These Codes?

In the aftermath of the Great Depression in 1929, a critical need for financial integrity emerged as millions faced hardships due to misleading business reporting.

Thus, in response, GAAP (Generally Accepted Accounting Principles) was established to ensure ethical and accurate financial reporting.

In 1933 and 1934, the Securities Act of 1933 and the Securities Exchange Act of 1934 marked the federal endorsement of GAAP, with the U.S. Securities and Exchange Commission (SEC) enforcing standards for public companies.

In 1936, the American Institute of Accountants (AIA) introduced GAAP terminology, setting the stage for a standardized approach to financial reporting.

Fast forward to 1972, the Financial Accounting Foundation was formed to oversee the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB).

In 1973, the American Institute of CPAs (AICPA) recommended FASB as an independent board to govern GAAP determinations and updates. The Financial Accounting Standards Advisory Council (FASAC) was established to monitor FASB.

Fast forward to 2023, and FASB remains an independent authority, diligently monitoring and updating GAAP to keep pace with evolving financial landscapes.

Where do you find GAAP codes?

Head to the Financial Accounting Standards Board (FASB) website.

For example, to navigate standards for the Entertainment industry’s Statement of Cash Flows, look for code 230, then click 926, then subcategory 05 or you could look for 926-230-05 to find specific rules on how to record according to the financial standards, the Film Costs in your financial statement.

Here’s a sample of Statement of Cash Flows from an entertainment company.

GAAP, a beacon of financial integrity. If you have any questions, please chat with us below, and we’ll happily guide you through the financial maze.

Until next time, Ciao everybody!

Happy Monday!