Accounting Policies for Reporting Income
Strayer University
Intermediate Accounting 1 – ACC 303
February 6, 2012
Professor Elizabeth Hewitt

Accounting Policies for Reporting Income

Examining accounting standards and policies information from various sources such as FASB Accounting Standards Codification (Financial Accounting Standards Board), AICPA (American Institute of CPA’s) and FASAB (Federal Accounting Standards Advisory Board) I can give a overview of how these items are defined in various resources.
The FASB Accounting Standards Codification is the single source of authoritative nongovernmental U.S. generally accepted accounting principles. Looking at the online FASB site it offers the most GAAP generally accepted accounting principles. The site is set up so that you can access the topics you’re looking for in a sort of drill down menu type of search. The site is somewhat user friendly in that it offers a tutorial on how to use the site. It also offers several useful functions such as cross-referencing and join-sections.
The AICPA sets ethical standards for the accounting profession and U.S. auditing standards for audits of private companies, non-profit organizations and federal, state and local governments. This resource offers tabs with drop down menus; one of which is marked Research under this tab you can find Standards that will take you to the Standard page offering a list of topics on Professional Accountant Standards such as ‘Audit and Attest Standards’, Code of Professional Conduct, Peer Review Standards, and Tax Standards. By clicking on any of these main topics you can access the statement or information you are seeking. This was by far the easiest to understand because of the commonly used format and the language. The AICPA
The mission of the FASAB is to develop accounting standards after considering the financial and budgetary information needs of congressional oversight groups, executive agencies, and the needs of other users of Federal financial information. The FASAB site is basically the handbook set up on a website it also has any updates to standards listed as well as an archived copy of the handbook I suppose for historical reference. The handbook contains the table of contents so it is easy to see what topics you are searching for and follow it to the Statement you need to reference. This too is easy to access but I would reiterate that mostly government accountants would probably use this resource. Using the FASB Accounting Standards Codification #220-10-10 states, “The purpose of reporting comprehensive income is to report a measure of all changes in equity of an entity that result from recognized transactions and other economic events of the period other than transactions with owners in their capacity as owners.” 10-2 If used with related disclosures and other information in the financial statements, the information provided by reporting comprehensive income should assist investors, creditors, and others in assessing an entity's activities and the timing and magnitude of an entity's future cash flows. FASB also provided 15-3: The guidance in this Topic does not apply to the following entities:
a. An entity that has no items of other comprehensive income in any period presented. In such cases, the entity is not required to report comprehensive income. See paragraphs 220-10-55-1 through 55-2 for items that are required to be reported as other comprehensive income.
b. A not-for-profit entity (NFP) that is required to follow the provisions of Subtopic 958-205.
As you can see the FASB does give the user an in-depth Statement on a topic with suggestions to follow through to other relevance facts on the subject. Our textbook defines comprehensive income as all changes in equity during a period except those resulting from investments by owners and distributions to owners. An example of comprehensive income would include unrealized net loss from marking investments to market value, increases or decreases in the value of foreign currency, adjustments resulting from changes in the value of pension plan assets needed to fund pension plan liabilities.
Most companies include revenues, expenses, gains and losses during the accounting period in net income. However, there are items that bypass regular classifications and are included in a measure called comprehensive income. Unrealized gains and losses on available-for-sale securities is one example of Comprehensive Income. These gains and losses are excluded from net income, due to the volatility because of fluctuation in fair value.

References
Financial Accounting Standards Board Accounting Standards Codification (2012) https://asc.fasb.org American Institute of Certified Public Accountants (2012) http://www.aicpa.org Federal Accounting Standards Advisory Board (2011) http://www.fasab.gov/accounting-standards/authoritative-source-of-gaap