American Institute of Certified Public Accountants (AICPA)

Definition

The American Institute of Certified Public Accountants (AICPA) is a professional organization representing certified public accountants (CPAs) in the United States. It sets ethical standards and auditing guidelines for the profession, as well as offers credentials and continuing education programs.

5 Must Know Facts For Your Next Test

1. AICPA establishes Generally Accepted Accounting Principles (GAAP), which are critical for accrual accounting.
2. It provides guidelines on recognizing revenue and expenses, ensuring consistency in financial reporting.
3. AICPA's standards influence how companies record sales when they are earned, not necessarily when cash is received.
4. The organization publishes the Code of Professional Conduct, which emphasizes accurate and honest financial reporting.
5. AICPA's resources help companies comply with legal requirements related to financial disclosures.

Review Questions

• What role does AICPA play in setting accounting standards?
• How do AICPA guidelines affect a company's recognition of sales and expenses?
• Why is adherence to AICPA's Code of Professional Conduct important in financial reporting?

Related terms

GAAP: Generally Accepted Accounting Principles are a collection of commonly-followed accounting rules and standards for financial reporting.

Revenue Recognition Principle: This principle dictates that revenue should be recognized when it is earned and realizable, regardless of when cash is received.

Expense Recognition Principle: Also known as the matching principle, this requires that expenses be matched with revenues in the period in which they are incurred to generate those revenues.