Dictionary / Financial Accounting Standards Board (FASB)
What does Financial Accounting Standards Board (FASB) mean in accounting?
Quick definition
GeneralA quasi-independent organization established in 1973 by the AICPA-Sponsored Financial Accounting Foundation for the purpose of developing principles for financial reporting by business enterprise. This term guides how bookkeepers record, classify, and explain related transactions in routine financial reporting.
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Examples
Your CPA names the rule-writer
You run a masonry shop. On February 12, your CPA reviews last year's books before she issues a compilation and says the $18,400 deposit from a plaza client for a March patio should sit as a liability, not February income, because that is how US financial reporting principles treat unearned cash. Those principles come from FASB, the organization that writes them. Recode the deposit in QuickBooks Online to unearned revenue. Do not add a FASB expense or FASB payable; the board is not a vendor.
A buyer asks for GAAP statements
You operate a screen-printing shop. On August 6, a buyer asks for GAAP financials while discussing a $240,000 purchase of the shop. You wonder if you need a FASB journal in Xero. GAAP is the rule set; FASB is the organization that develops those rules. Send the P&L and balance sheet your CPA prepared on a GAAP basis, and do not create a FASB account or hunt for a FASB invoice.
Why it matters
FASB is the organization that writes the US principles for financial reporting by businesses. You need the name because a CPA, lender, or buyer will point at those principles, and you should know who issued them. You will not post this most months; it comes up at year-end, when you apply for a bank package, or when someone asks for GAAP statements. GAAP is the rule set, and FASB is the board that develops it, so do not treat FASB as a ledger account or a journal you enter.
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What is Financial Accounting Standards Board (FASB) in bookkeeping?
A quasi-independent organization established in 1973 by the AICPA-Sponsored Financial Accounting Foundation for the purpose of developing principles for financial reporting by business enterprise.
When should I use Financial Accounting Standards Board (FASB)?
Use Financial Accounting Standards Board (FASB) when the transaction facts match its definition and you need the ledger and financial statements to reflect the correct account and period.
What is a common mistake with Financial Accounting Standards Board (FASB)?
Financial Accounting Standards Board (FASB) is used for financial accounting standards board (fasb) entries, while F.O.B covers a related but distinct bookkeeping purpose. Review both terms before posting unusual transactions. A common mistake is applying it by label only instead of checking the underlying transaction details.