Two boards establish generally accepted accounting principles in the United States. The Government Accounting Standards Board sets standards for state and local government entities, and the Financial Accounting Standards Board sets rules for private sector accounting. Because the FASB's focus is to help investors and creditors make decisions, while the focus of the GASB is to make sure government entities are accountable for the money they receive from the public or taxpayers, differences in accounting practices exist between GASB and FASB.

Balance Sheet

GASB requires that the balance sheet, usually called the statement of net assets, present current assets separately from non-current assets and present current liabilities separately from non-current liabilities. FASB permits this type of classified balance sheet, usually called the statement of financial position, but does not require it. The GASB, but not the FASB, requires a separate display of nondepreciable capital assets and depreciable capital assets.

Net Assets

Although both the GASB and FASB recognize three classes of net assets, the classes are different. FASB classifies net assets as permanently restricted, temporarily restricted or unrestricted. GASB classifies net assets as unrestricted, restricted or invested in capital assets, net of related debt. The classification "invested in capital assets, net of related debt" refers to the original cost of the capital assets minus the accumulated depreciation and capital-related debt. GASB also requires that an entity with any true endowments divide restricted net assets into restricted nonexpendable and restricted expendable components.

Cash Flow Statement

FASB has three categories of cash flows: operating, investing and financing. The GASB has four categories: operating, investing, cash flows from noncapital financing activities and cash flows from capital and related financing activities. GASB requires that entities use the direct method of determining cash flows from operating activities, while the FASB allows either the direct or indirect method.


The rules of the two boards give rise to many detailed differences in accounting. This difference in accounting practices between GASB and FASB sometimes presents a problem when it comes to comparing entities that can be either publicly or privately owned, such as a utility, hospital, college or university. Because the publicly owned entities follow GASB and the privately owned entities follow FASB, it's difficult to compare the financial statements of, for example, a public university and a private university.