Accounting and Disclosures
Hierarchy of GAAP
Financial Accounting Standards Board (FASB) Statement No. 162, The Hierarchy of Generally Accepted Accounting Principles, identifies the sources of accounting principles and the framework to select them in preparing financial statements in conformity with U.S. generally accepted accounting principles (GAAP). The GAAP hierarchy should be directed to the company.
The hierarchy of GAAP applies to the following levels:
An accounting entity should follow the accounting treatment specified by the accounting principle from the source in the highest category available. A company should not follow the accounting treatment specified in accounting principles for similar transactions or events in cases in which those accounting principles either prohibit the application of the accounting treatment to the particular transaction or ...