Accounting Interpretation

AAA

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.

INVESTOPEDIA EXPLAINS '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 Trends And Techniques ...

    A prominent publication put out annually by the American Institute ...
  2. APB Opinion

    An authoritative pronouncement issued by the Accounting Principles ...
  3. Generally Accepted Accounting Principles ...

    The common set of accounting principles, standards and procedures ...
  4. Financial Accounting Standards ...

    A seven-member independent board consisting of accounting professionals ...
  5. Accounting

    The systematic and comprehensive recording of financial transactions ...
  6. Accounting Method

    The method by which income and expenses are reported for taxation ...
Related Articles
  1. Ancient Accounting Systems
    Insurance

    Ancient Accounting Systems

  2. Financial Statement Manipulation An ...
    Markets

    Financial Statement Manipulation An ...

  3. What Would Full Disclosure Mean For ...
    Active Trading

    What Would Full Disclosure Mean For ...

  4. Financial Regulators: Who They Are And ...
    Options & Futures

    Financial Regulators: Who They Are And ...

comments powered by Disqus
Hot Definitions
  1. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  2. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  3. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  4. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  5. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  6. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
Trading Center