Question

What is Codification of Accounting Standards? Describe the structure of codification. Codification of accounting standards reduces the time and effort of researching the vast database of GAAP. Do you agree?

Answer 1

Codification of Accounting Standards is known to be the widely accepting principle of accounting also known as GAAP that is accepted by the FASB for application to non-governmental firms.

The structure of codification

Codification is done in a way that the reporting and accounting standards are simplified to enable easy access by users to every authoritative GAAP in the United States by ensuring that all authoritative literature are provided in an organized manner. All nongovernmental accounting literature and pronouncement were organized under about 90 topics, encompassing standard-setters issued accounting principles within levels A to D in the hierarchical order of the United States GAAP.

Codification of accounting standards helps in the reduction of the time and effort to research the entire database of GAAP because of its reorganization into only 90 accounting topics and each of these topics are displayed using a very accurate, concise, and consistent structure.

Step-by-step explanation:

Codification of Accounting Standards is known to be the widely accepting principle of accounting also known as GAAP that is accepted by the FASB for application to non-governmental firms.

The structure of codification

Codification is done in a way that the reporting and accounting standards are simplified to enable easy access by users to every authoritative GAAP in the United States by ensuring that all authoritative literature are provided in an organized manner. All nongovernmental accounting literature and pronouncement were organized under about 90 topics, encompassing standard-setters issued accounting principles within levels A to D in the hierarchical order of the United States GAAP.

Codification of accounting standards helps in the reduction of the time and effort to research the entire database of GAAP because of its reorganization into only 90 accounting topics and each of these topics are displayed using a very accurate, concise, and consistent structure.

Answer 2

Codification of Accounting Standards refers to a set guideline for the preparation of financial statements, aimed at organizing data into a simplified user access format.

Step-by-step explanation:

When data from a company becomes so much, there is a need to make documentation and researching the database easier. Codification of Accounting Standards, is aimed at this. Computerized accounting involves codification of accounts. There is a hierarchical relationship between the groups and its components which to be maintained, requires proper codification.

Codification of accounting standards specifically guides the preparation of financial statements in organizations.

STRUCTURE OF CODIFICATION

The standards of codification has a set structure involving topics and subtopics. The structure generally entails:

• Topic: Topics involves a collection of related guidance.Topics correlate with standards issued by the International Accounting Standards Board

• Subtopics: Subtopics are generally subsets topics and are distinguished by type.
• Sections: Sections represent the nature of the content in a subtopic.

• Subsections: Subsections occur in few cases. It is used when there is a need to filter content that relates with multiple sections of a particular subtopic.

Codification of accounting standards, reduces the time and effort of researching the database of GAAP. The orderliness that codification gives as well as ensuring the information in the database are kept up to date, makes research in a database as large, easier.