Learning Generally Accepted Accounting Principles (GAAP) used to be a daunting task, as the documents that comprise it vary in format, completeness, and structure. In some cases, these documents are inconsistent and difficult to interpret. As a result, financial statement preparers sometimes are unsure whether they have the right GAAP, which makes determining what is authoritative, and what is not, difficult. In response to these concerns, the FASB developed the Financial Accounting Standards Board Accounting Standards Codification (or simply, the Codification). The Codification provides in one place all the authoritative literature related to a given topic. It explains what GAAP is and eliminates nonessential information, such as redundant document summaries, basis for conclusions sections, and historical content. This greatly simplifies user access to GAAP.

The Codification – accessible at http://asc.fasb.org/home—is available as an online, real-time database. Presently, the Codification is available to use at no cost. You simply need to register by clicking on the Registration link, which is located in the area marked "D" on the Codification screenshot shown below.

In order to use the Codification effectively, you need to understand its structure. Four major categories of topics are used to structure all of the topics:

For example, suppose you had a question related to the proper accounting for the intangible asset Goodwill. You could directly access this information by drilling down into the Codification as follows: Assets>Intangible Assets>Goodwill. To navigate in this manner, go to the area marked "A" on the screenshot above.

However, understanding the overall structure of the Codification is only one of three methods used for accessing its contents. A second method is to use the Codification search tool, which works much like common Internet search engines. As with most search engines, the more often you use it, the more efficient and effective you will be at locating the information. The area to input your search terms is marked "B" in the Codification screenshot above.

The third method to access specific material in the Codification is through the Codification's numbering system. If you know specific Topic, Subtopic, and Section numbers, you can access them directly. For example, if you wanted to review all of the Codification material related to disclosures for operating leases, you could go directly to Topic 840 (Leases), Subtopic 320 (Operating Leases), and Section 50 (Disclosure). This numbering system also provides a way to efficiently reference material in the Codification. For example, FASB ASC 840-20-50 would be the reference for the operating lease disclosure material. To use this method, enter the information in the boxed area marked "C" in the screenshot above.

For individuals (like you) attempting to learn GAAP, the Codification will be invaluable. It is an outstanding effort by the profession to streamline and simplify how to determine what GAAP is, which will lead to better financial accounting and reporting. We provide references to the Codification throughout this textbook using a numbering system. For example, a bracket with a number, such as [1], indicates that the citation to the FASB Codification can be found in the FASB Codification section at the end of the chapter (immediately before the assignment materials). FASB Codification Exercises have been included at the end of each chapter, to help familiarize you with this useful tool.