question archive What does hierarchy mean as it relates to the financial reporting frame work as described in FASB 162
What does hierarchy mean as it relates to the financial reporting frame work as described in FASB 162
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What does hierarchy mean as it relates to the financial reporting frame work as described in FASB 162.
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- The GAAP hierarchy is a four-tiered framework for selecting the principles that accountants should use in preparing financial statements of nongovernmental entities.
- Because multiple organizations regulate separate parts of the accounting world, there was a need to identify the most relevant standards for various accounting topics.
- The hierarchy of GAAP identifies which standards and best practices are the most authoritative for a particular instance or problem.
- If no information on the topic is given at the higher levels, the accountant should look to the next level down for relevant pronouncements.
