Chapter 2

Framework of Financial Accounting Concepts and Standards: A Historical Perspective

Reed K. Storey, PhD, CPA

Financial Accounting Standards Board

2.1 Financial Accounting and Reporting

(a) Financial Accounting Standards Board and General Purpose External Financial Accounting and Reporting

(b) Management Accounting and Tax Accounting

2.2 Why We Have a Conceptual Framework

(a) Special Committee on Cooperation with Stock Exchanges

(i) “Accepted Principles of Accounting.”

(ii) The Best-Laid Schemes

(iii) Securities Acts and the Securities and Exchange Commission—“Substantial Authoritative Support.”

(b) Committee on Accounting Procedure, 1938–1959

(i) No Comprehensive Statement of Principles by the Institute

(ii) Accounting Research Bulletins

(iii) Failure to Reduce the Number of Alternative Accounting Methods

(c) Accounting Principles Board—1959–1973

(i) Postulates and Principles

(ii) The Accounting Principles Board, the Investment Credit, and the Seidman Committee

(iii) End of the Accounting Principles Board

(d) Financial Accounting Standards Board Faces Defining Assets and Liabilities

(i) Were They Assets? Liabilities?

(ii) Nondistortion, Matching, and What-You-May-Call-Its

(iii) An Overdose of Matching, Nondistortion, and What-You-May-Call-Its

(iv) Initiation of the Conceptual Framework

2.3 Financial Accounting Standards Board's Conceptual Framework

(a) Framework as a Body of Concepts

(i) Information Useful in Making Investment, Credit, and Similar Decisions

(ii) Representations ...

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