US GAAP, and where these rules come from

This system states a lot of accounting rules. Revenue is earned on delivery. Depreciation allocates cost rather than measuring value. A statement of cash flows has three sections and reconciles to the change in cash. A posted entry is reversed, never edited.

Every one of those has an authority behind it, and a component that encodes a rule without naming its source is asking to be trusted on nothing. So this document is the map: what is required by US GAAP, what is presentation convention, and what is simply the mechanics of bookkeeping — three different kinds of claim that get flattened into "best practice" everywhere else.

The machine-readable copy of this table lives in src/learn/sources.ts. It is rendered on every lesson of the course at /learn, on every glossary term page, and asserted against this document by tests/course.test.ts — so a citation cannot be added in one place and forgotten in the other.

The hierarchy

The Codification is authoritative GAAP. There is one source, and everything in it carries the same weight:

This Statement establishes the Codification as the source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under federal securities laws are also sources of authoritative GAAP for SEC registrants. All guidance contained in the Codification carries an equal level of authority.

— FASB Statement No. 168, ¶6 (June 2009)

Concepts Statements are not GAAP. They define what an asset is; they do not tell you what to do. The Conceptual Framework says so about itself: a Concepts Statement does not "amend, modify, or interpret the Accounting Standards Codification." We quote CON 8 for the definitions of the elements because they are the clearest statement of what those words mean — not as a requirement.

This is US GAAP only. An entity reporting under IFRS answers to different numbers (IAS 1, IAS 7, IFRS 15) and in places to different rules. Nothing in this system should be read as saying the two are interchangeable.

Access. The Codification is free to read at asc.fasb.org after registration. Where a quotation below could not be pulled from the Codification itself, the "read in" column names the openly readable document the text was verified in, and the date it was checked.

What is required, what is convention

Claim this system makes	Kind	Authority
Assets, liabilities, equity, revenue and expenses have precise definitions	Concept	CON 8, Ch. 4, ¶E16, ¶E37, ¶E61, ¶E80–E81
Revenue is recognized when control transfers, not when cash arrives	Required	ASC 606-10-05-3, -05-4; 606-10-25-23, -25-30
A cost paid ahead of consumption is an asset until consumed	Required	ASC 340-10
Cash taken before delivery is a liability, not revenue	Required	ASC 606-10-45 (contract liability)
A cost incurred and unbilled is accrued into the period	Required (accrual basis)	CON 8 accrual concept, ASC 405
Depreciation allocates cost over useful life; it is not a valuation	Required	ASC 360-10-35-4
Finite-lived intangibles amortize over their useful life; prepaid costs are expensed as consumed	Required	ASC 350-30-35; ASC 340-10
A balance sheet presents position; a P&L presents a period	Required	ASC 210, ASC 220, ASC 205
Cash flows are classified operating / investing / financing	Required	ASC 230-10-45-10
The indirect method separately reports the change in receivables, inventory and payables	Required	ASC 230-10-45-28, -45-29
The statement reconciles opening to closing cash	Required	ASC 230-10-45-24
An error is corrected and disclosed, not quietly overwritten	Required	ASC 250-10-45
Materiality is not a fixed percentage	SEC staff guidance (registrants)	SEC SAB No. 99
A registrant's balance sheet uses prescribed captions	Required (SEC registrants)	Reg S-X, 17 CFR 210.5-02
A published non-GAAP measure is reconciled to the GAAP measure	Required (SEC registrants)	Reg G; Item 10(e) of Reg S-K
Negatives are parenthesised; subtotals take a single rule and totals a double rule	Convention	Presentation practice — not codified
Debit is the left column and credit the right	Mechanics	Bookkeeping convention — not codified
Debit and credit are two columns rather than one signed number	Mechanics	Bookkeeping convention — not codified
A chart of accounts has 1000s for assets, 2000s for liabilities	Convention	Not prescribed by GAAP
Nearly every lease puts a right-of-use asset and a lease liability on the balance sheet	Required	ASC 842-20-25-1 (short-term lease election: 842-20-25-2)
Receivables carry an allowance for lifetime expected credit losses from day one	Required	ASC 326-20 (CECL)
Deferred taxes are measured at enacted rates and reduced by a valuation allowance when realization is not more likely than not	Required	ASC 740-10-30
Events after the balance sheet date are recognized only if the condition existed at that date	Required	ASC 855-10-25
A parent consolidates what it controls and eliminates intercompany balances	Required	ASC 810-10-45-1
Monetary items are remeasured through earnings; translation differences go to OCI	Required	ASC 830-20-35-1; ASC 830-30-45
Segregation of duties, approval chains, evidence, audit trail	Internal control	SOX §404 — SEC Release 33-8238

The distinction in the middle column is the point of the table. A component that renders a negative in parentheses is following a convention, and someone is entitled to disagree with it. A component that renders a customer deposit as revenue is wrong, and no amount of taste makes it right.

Recent standards this system tracks

Accounting Standards Updates amend the Codification; until an ASU is effective for an entity, the superseded text still governs it. A component that encodes a rule from an ASU states which version it follows. Effective dates below are for calendar-year entities unless noted, and are checked against FASB's ASU pages and the large-firm summaries as of October 2026.

ASU	Topic	What changes for the UI	Effective
2016-02	ASC 842 Leases	ROU asset and lease liability on the balance sheet; maturity analysis	In effect for all entities
2016-13	ASC 326 Credit losses (CECL)	Lifetime expected-loss allowance replaces incurred loss	In effect for all entities
2023-07	ASC 280 Segments	Significant segment expenses provided to the CODM, annually and interim	PBEs: fiscal years beginning after 15 Dec 2023; interim after 15 Dec 2024
2023-08	ASC 350-60 Crypto assets	In-scope crypto measured at fair value through net income, presented separately	Fiscal years beginning after 15 Dec 2024
2023-09	ASC 740 Income taxes	Rate reconciliation by prescribed category; income taxes paid by jurisdiction	PBEs: annual periods beginning after 15 Dec 2024; others after 15 Dec 2025
2024-03 / 2025-01	ASC 220-40 Expense disaggregation	Footnote splitting expense captions into inventory purchases, employee compensation, D&A and other	PBEs: annual periods beginning after 15 Dec 2026; interim after 15 Dec 2027
2025-05	ASC 326 Credit losses	Practical expedient for current AR and contract assets; private-entity election to consider subsequent collections	Annual periods beginning after 15 Dec 2025
2025-06	ASC 350-40 Internal-use software	Project stages removed; capitalize once funding is committed and completion is probable	Annual periods beginning after 15 Dec 2027

Outside GAAP but on the same screens: from 2026 the Form 1099-NEC and 1099-MISC reporting threshold rises from $600 to $2,000 (One Big Beautiful Bill Act, July 2025), and under IFRS, IFRS 18 replaces IAS 1 for annual periods beginning on or after 1 January 2027.

The sources, and what we read

Every quotation in this system was read in the document named here, on the date named here. Nothing in this table was recalled from memory.

Cite	What it says	Read in	Access
FASB Statement No. 168, ¶6	The Codification is the source of authoritative GAAP	Same document (PDF)	Free
ASC 105-10	Generally Accepted Accounting Principles — Overall	Codification	Registration
CON 8, Ch. 4, ¶E16	"An asset is a present right of an entity to an economic benefit."	Concepts Statement No. 8, Chapter 4 (Dec 2021), PDF	Free
CON 8, Ch. 4, ¶E37	"A liability is a present obligation of an entity to transfer an economic benefit."	As above	Free
CON 8, Ch. 4, ¶E61	Equity is "the residual interest in the assets … after deducting its liabilities"	As above	Free
CON 8, Ch. 4, ¶E80–E81	Definitions of revenues and expenses	As above	Free
CON 8, Ch. 4, App. A	What accrual accounting attempts to do (carried forward from CON 6 ¶139)	As above	Free
ASC 606-10-05-3, -05-4	The revenue core principle and the five steps	PwC Viewpoint, ASC 606 five-step model	Registration
ASC 230-10-45-10	Cash flows are classified as operating, investing or financing	EY FRD, Statement of cash flows (ASC 230), July 2026	Registration
ASC 230-10-45-28, -45-29	The indirect method, and its minimum reconciling items	As above	Registration
ASC 230-10-45-24	The statement reconciles beginning and ending cash	As above	Registration
ASC 360-10-35-4	Depreciation is "a process of allocation, not of valuation"	PwC Viewpoint, PP&E depreciation overview	Registration
SEC SAB No. 99	"Exclusive reliance on … any percentage or numerical threshold has no basis in the accounting literature or the law."	Same document	Free
Reg S-X, 17 CFR 210.5-02	The balance sheet captions a registrant must present	17 CFR 210.5-02, 2024 edition (govinfo PDF)	Free
Reg G — SEC Release 33-8176	A non-GAAP measure must be reconciled to the GAAP measure	17 CFR 244.100(a)(2), Cornell LII	Free
SEC Release 33-8238	Management's report on internal control over financial reporting	Same document	Free
IRS Publication 538	The cash and accrual methods, for tax	Same document	Free

Topic-level pointers used without quotation, because the claim is the topic rather than a paragraph: ASC 205, 210, 220, 235, 250, 270, 280, 310, 323, 326, 330, 340, 350, 360, 405, 450, 505, 740, 810, 830, 842, 855.

Metrics are not GAAP

Everything in Metric definitions — ARR, EBITDA, net burn, runway, magic number — is a non-GAAP financial measure. That is not a criticism; they are often the most useful numbers a company has. It does have a consequence, and it is a legal one for anyone who files:

A reconciliation (by schedule or other clearly understandable method), which shall be quantitative for historical non-GAAP measures presented …

— Regulation G, SEC Release 33-8176 (January 2003)

So a metric component in this system states its formula, states its inputs, and never presents itself with the visual authority of a statement line. Every metric term in the glossary carries the Reg G citation for the same reason.

What this document is not

It is not accounting advice, and it is not a substitute for the standard. The Codification runs to thousands of pages of judgment that no component library can encode, and the moment a real question appears — a contract with variable consideration, a lease with a renewal option, a functional currency that is not obvious — the answer is in the standard and in the judgment of a qualified accountant, not in a React component.

What this system can do, and does, is refuse to render something that is wrong under any reading: revenue that is really a deposit, a negative rendered as a minus in a statement, a null balance shown as $0.00, a posted entry with an edit affordance. Those are the errors that survive review because they look finished.