Most individuals who understand the basics of financial reporting are familiar with the phrase generally accepted accounting principles (GAAP) and will readily identify the Financial Accounting Standards Board (FASB) as the standard-setting body in the United States currently responsible for establishing accounting principles for nongovernmental entities. However, some may not be aware that there is no single reference source for GAAP because these principles are derived from a variety of sources. For example, although the FASB is responsible for issuing FASB Statements of Financial Accounting Standards, Interpretations, and Technical Bulletins, the American Institute of Certified Public Accountants (AICPA) issues Statements of Position, Audit and Accounting Guides, and Practice Bulletins, and the FASB Emerging Issues Task Force (EITF) issues EITF Abstracts.

It may seem that accounting principles could be generally accepted because of popular vote or consensus of opinion. However, generally accepted accounting...