Basic concepts and accounting principles underlying ... - ICDST

University of Mississippi

eGrove

Association Sections, Divisions, Boards, Teams

American Institute of Certified Public Accountants (AICPA) Historical Collection

1970

Basic concepts and accounting principles underlying financial statements of business enterprises; Statement of the Accounting Principles Board 4;APB Statement 4;

American Institute of Certified Public Accountants. Accounting Principles Board

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Recommended Citation

American Institute of Certified Public Accountants. Accounting Principles Board, "Basic concepts and accounting principles underlying financial statements of business enterprises; Statement of the Accounting Principles Board 4;APB Statement 4;" (1970). Association Sections, Divisions, Boards, Teams. 172.

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STATEMENT OF THE

OCTOBER 1970

ACCOUNTING PRINCIPLES BOARD

4

Basic Concepts and Accounting Principles Underlying Financial Statements of Business Enterprises

Chapter

CONTENTS

Paragraph Numbers

1 PURPOSE AND NATURE OF THE

STATEMENT

1-8

Purpose of the Statement

1-2

Nature of the Statement

3-7

Terminology

8

2 SUMMARY OF THE STATEMENT

9-39

Financial Statements

10-16

The Environment of Financial Accounting

17-20

Objectives of Financial Accounting and

Financial Statements

21-24

Basic Features and Basic Elements of Financial

Accounting

25-26

Generally Accepted Accounting Principles

27-31

Dynamic Nature of Financial Accounting

32

Characteristics and Limitations of Financial

Accounting and Financial Statements 33-35

Use of Financial Accounting Information

36-39

Issued by the Accounting Principles Board of the American Institute of Certified Public Accountants

COPYRIGHT 1970 BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS, INC. 666 FIFTH AVENUE, N E W YORK, N E W YORK 10019

Paragraph Numbers

THE ENVIRONMENT OF FINANCIAL ACCOUNTING

40-72

Uses and Users of Financial Accounting

Information Users with Direct Interests Users with Indirect Interests Common and Special Needs The Organization of Economic Activity in

Society

Economic Activity in Individual Business Enterprises

Economic Resources Economic Obligations Residual Interest Relationship Among Economic Resources,

Economic Obligations, and Residual Interest Changes in Economic Resources, Economic Obligations, and Residual Interest Discussion of Classification of Events Cost Measuring Economic Activity Measurement Problems Exchange Prices

43-48 44 45

46-48

49-55

56-65 57 58 59

60

61-65 64 65

66-72 67-68 69-72

4 OBJECTIVES OF FINANCIAL ACCOUNTING

AND FINANCIAL STATEMENTS 73-113

Objectives of Particular Financial Statements

75

General Objectives

76-84

Statement of the General Objectives

77-82

Discussion of General Objectives

83-84

Qualitative Objectives

85-109

Statement of the Qualitative Objectives

87-94

Comparability

95-105

Comparability Within a Single Enterprise 96-99

Consistency

98

Regular reporting periods

99

Comparability Between Enterprises

100-105

Chapter

Paragraph Numbers

Adequate Disclosure Reliability of Financial Statements Achieving the Objectives

106 107-109 110-113

5 BASIC FEATURES AND BASIC ELEMENTS

OF FINANCIAL ACCOUNTING

114-136

Basic Features of Financial Accounting

114-129

Statement of the Basic Features of Financial

Accounting

115-128

Basic Features and the Environment

129

Basic Elements of Financial Accounting

130-136

Financial Position

132-133

Results of Operations

134-135

Interrelationship of Financial Position and

Results of Operations

136

6 GENERALLY ACCEPTED ACCOUNTING

PRINCIPLES-PERVASIVE

PRINCIPLES

137-174

Generally Accepted Accounting Principles

137-142

Pervasive Principles

143-174

Pervasive Measurement Principles

144-168

Initial Recording

145-146

Income Determination

147

Revenue and Realization

148-153

Expense Recognition

154-160

Application of Expense Recognition

Principles

161

Effect of the Initial Recording, Realization,

and Expense Recognition Principles 162-164

Unit of Measure

165-166

Effect of the Unit of Measure Principle 167-168

Modifying Conventions

169-174

Conservatism

171

Emphasis on Income

172

Application of Judgment by the

Accounting Profession as a Whole .... 173-174 iii

Chapter

Paragraph Numbers

7 GENERALLY ACCEPTED ACCOUNTING

PRINCIPLES-BROAD

OPERATING PRINCIPLES

175-201

Principles of Selection and Measurement

177-179

Measurement Bases

179

Statement of the Principles of Selection and

Measurement

180-187

Principles That Guide Selection of Events

and Assignment of Dollar Amounts

181-185

Accounting for Those Assets and Liabilities

That Are Not Resources or

Obligations

186

Principles That Determine Effects on Assets,

Liabilities, Owners' Equity, Revenue,

and Expenses of an Enterprise

187

Principles of Financial Statement Presentation 188-189

Fair Presentation in Conformity with Generally

Accepted Accounting Principles

189

Statement of the Principles of Financial

Statement Presentation

190-201

8 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES-DETAILED ACCOUNTING PRINCIPLES

202-206

9 FINANCIAL ACCOUNTING IN THE FUTURE 207-219

Dynamic Nature of Financial Accounting

208-209

Basis for Evaluation

210-213

Practical Operation and Internal Consistency

of Generally Accepted Accounting

Principles

211

The Environment

212

Objectives of Financial Accounting and

Financial Statements

213

Proposals for Change

214-219

INDEX

iv

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