DEFINITION of 'Accounting Interpretation'

A statement clarifying how accounting standards should be applied. Accounting interpretations are issued by accounting standards groups, such as the Financial Accounting Standards Board (FASB), American Institute of CPAs (AICPA) or International Accounting Standards Board (IASB). Interpretations are generally not requirements, but rather outline best practices and give further explanation. By contrast, accountants are required to follow the accounting standards that are in place.

BREAKING DOWN 'Accounting Interpretation'

As financial transactions continue to evolve, new situations develop that may not have been foreseen by the existing accounting standards. In this case, accounting boards may choose to issue an interpretation outlining the recommended practices for accounting as questions arise. If new changes are particularly significant, the standards themselves may be adjusted so that compliance is required.



RELATED TERMS
  1. Accounting Standard

    A principle that guides and standardizes accounting practices. ...
  2. Accounting Changes And Error Correction

    Requirements for the accounting for and reporting of a change ...
  3. International Accounting Standards ...

    An older set of standards stating how particular types of transactions ...
  4. Exposure Draft

    A document released by the Financial Accounting Standards Board ...
  5. Accounting Principles Board - APB

    The prior authoritative body of the American Institute of Certified ...
  6. Statement of Financial Accounting ...

    A formal document issued by the Financial Accounting Standards ...
Related Articles
  1. Investing

    International Financial Reporting Standards (IFRS)

    International Financial Reporting Standards are accounting rules and guidelines governing the reporting of different types of accounting transactions.
  2. Investing

    The Impact Of Combining The U.S. GAAP And IFRS

    The convergence of accounting standards is changing the attitudes of CPAs and CFOs toward harmonization of international accounting.
  3. Managing Wealth

    Accounting Research Manager: Job Description & Average Salary

    Learn about the average salary of an accounting research manager as well as the necessary skills, experience and education, and licenses to hold this position.
  4. Trading

    Forex Basics: Setting Up An Account

    The line between profitable forex trading and ending up in the red may be as simple as choosing the right account.
  5. Financial Advisor

    Financial Accounting

    Financial accounting is the process of gathering, recording, summarizing and reporting financial data relating to a business. The ultimate goal is to accurately report the financial picture and ...
  6. Personal Finance

    Accountant: Job Description & Average Salary

    Discover what the job description of an accountant entails, along with education and training, salary and skills necessary for success.
  7. Investing

    Financial History: The Rise Of Modern Accounting

    Find out how these two have grown hand-in-hand throughout our modern history.
  8. Managing Wealth

    Accounting Research Manager: Career Path & Qualifications

    Discover the basic responsibilities of an accounting research manager, the path this career usually takes and the qualifications needed for this career.
RELATED FAQS
  1. How does the Financial Accounting Standards Board (FASB) establish accounting protocol?

    Find out how the Financial Accounting Standards Board or FASB, identifies possible financial reporting issues and determines ... Read Answer >>
  2. What are the objectives of financial accounting?

    Learn about the principle objectives of financial accounting, including the furnishing of the financial statements for those ... Read Answer >>
  3. How does financial accounting help decision making?

    Read a brief overview of some areas where financial accounting helps in decision making for investors, lending institutions ... Read Answer >>
  4. What are the differences between a change in accounting principle and a change in ...

    Learn how to differentiate between a change in accounting principle and a change in accounting estimate and how accountants ... Read Answer >>
  5. What are some good online resources for me to learn about Generally Accepted Accounting ...

    Learn about three authoritative online resources for generally accepted accounting principles, or GAAP: the websites for ... Read Answer >>
  6. Do all countries follow the same GAAP?

    Learn about GAAP and IFRS accounting standards, and understand the difficulties in having a basic set of accounting principles ... Read Answer >>
Hot Definitions
  1. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  2. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  3. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  4. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  5. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
  6. Yuppie

    Yuppie is a slang term denoting the market segment of young urban professionals. A yuppie is often characterized by youth, ...
Trading Center