U.S. GAAP — LLMpedia

U.S. GAAP
Name	U.S. GAAP
Established	1973
Issuer	Financial Accounting Standards Board
Type	Accounting standard

Contents

U.S. GAAP is the body of accounting principles, standards, and procedures used by public and many private entities in the United States. It provides a framework for preparation of financial statements used by investors, creditors, and regulators including the Securities and Exchange Commission and the Public Company Accounting Oversight Board. U.S. GAAP influences reporting for corporations such as Apple Inc., ExxonMobil, Walmart, and General Electric and interfaces with global frameworks applied by International Financial Reporting Standards Foundation and the Financial Accounting Standards Board.

Overview

U.S. GAAP was developed through pronouncements by the Financial Accounting Standards Board, successor to the Accounting Principles Board and the Wheat Committee recommendations, and it has been shaped by interactions with the Securities and Exchange Commission and landmark cases such as decisions involving Enron and WorldCom. Major corporate reporters affected include Microsoft, Berkshire Hathaway, Citigroup, Bank of America, and Johnson & Johnson. Interpretation and application are influenced by authoritative literature like Accounting Standards Codification issued by the Financial Accounting Standards Board and enforcement actions brought by the Public Company Accounting Oversight Board and the Securities and Exchange Commission.

U.S. GAAP comprises accounting concepts, recognition criteria, measurement bases, presentation requirements, and disclosure obligations. Core elements reflect guidance on assets, liabilities, revenues, expenses, and equity as applied by companies such as Chevron Corporation, Ford Motor Company, Pfizer, Amazon (company), and AT&T. The framework incorporates revenue recognition guidance influenced by rulings affecting General Motors and Tesla, Inc., lease accounting provisions relevant to Delta Air Lines and American Airlines Group, and financial instruments guidance impacting Goldman Sachs, Morgan Stanley, JPMorgan Chase, and Wells Fargo. U.S. GAAP includes special-purpose guidance for industries exemplified by Boeing, Marriott International, ExxonMobil, and Kraft Heinz Company.

The principal standard-setter is the Financial Accounting Standards Board, supported historically by the Committee on Accounting Procedure and the Accounting Principles Board. Oversight involves the Securities and Exchange Commission and the Financial Accounting Foundation, with enforcement by the Public Company Accounting Oversight Board and litigation in federal courts such as the United States Court of Appeals for the Second Circuit. Due process typically includes exposure drafts, public comment from firms like PricewaterhouseCoopers, Deloitte, KPMG, and Ernst & Young, and consultation with stakeholders including institutional investors such as BlackRock and Vanguard Group.

Revenue recognition under Topic 606 addresses contracts with customers and has been applied by Apple Inc., Netflix, Inc., and Alphabet Inc.. Leases under Topic 842 affect Delta Air Lines, United Airlines Holdings, and Southwest Airlines. Financial instruments, credit losses (CECL) under Topic 326, and impairment rules influence banking institutions like JPMorgan Chase and Bank of America. Business combinations under Topic 805 and goodwill impairment testing concern transactions such as acquisitions by Amazon (company), Facebook, Inc. (now Meta Platforms), and Disney. Income taxes and deferred tax accounting impact multinationals like Intel Corporation and IBM. Other significant areas include inventory costing methods relevant to Costco Wholesale Corporation and Target Corporation, equity compensation affecting Microsoft and Adobe Inc., and segment reporting as applied by conglomerates such as 3M Company and Siemens AG.

Implementation practices involve auditors, preparers, and regulators. Public company audits by firms such as PricewaterhouseCoopers, Deloitte, KPMG, and Ernst & Young assess compliance with U.S. GAAP and internal controls reviewed under requirements derived from Sarbanes–Oxley Act of 2002. Enforcement actions and accounting restatements have affected companies including Enron, WorldCom, Tyco International, and HealthSouth Corporation, prompting investor litigation and regulatory sanctions by the Securities and Exchange Commission and oversight by the Public Company Accounting Oversight Board.

Interactions between U.S. GAAP and International Financial Reporting Standards have involved the Financial Accounting Standards Board and the International Accounting Standards Board, with joint projects on revenue recognition and leases. Differences remain in areas such as inventory accounting (LIFO), goodwill impairment, and financial instruments classification, affecting cross-border reporters like Royal Dutch Shell, Toyota Motor Corporation, Samsung Electronics, and Nestlé S.A.. Convergence efforts have included memoranda of understanding involving the European Commission, the Securities and Exchange Commission, and multilateral dialogues with national standard-setters such as the Accounting Standards Board of Japan and the Australian Accounting Standards Board.

Category:Accounting standards