FASB Codification: 4 Essential Levels Made Easy

Last updated: October 22, 2026. Written and reviewed by Mansour Farhat, CPA, CIA, DBA.

The FASB Codification is the single source of authoritative U.S. GAAP for nongovernmental entities, meaning businesses and nonprofits, not governments. Its full name is the FASB Accounting Standards Codification, or ASC. Launched July 1, 2009, it reorganized older standards into about 90 Topics so you can research an issue in one place. It is free to use at asc.fasb.org. For companies that file with the SEC, the SEC’s rules and interpretive releases are also authoritative, and the Codification carries that SEC content in separate sections marked with an S.

Every ASC citation is built from four levels: Topic → Subtopic → Section → Paragraph. The FASB also groups the roughly 90 Topics into nine broad Areas, such as Assets, Liabilities, and Revenue, but the Area name never appears in a citation. Learning the four citation levels helps you read a reference like ASC 310-10-35 and find the guidance that answers your question. Think of the numbers as a street address for the guidance, not as a formula.

Watch: FASB Codification overview

In this brief segment, Professor Farhat explains how accounting guidance was brought together in a searchable Codification. Watch the overview, then use the four-level structure below to understand ASC references.

Selected segment: 10:32–11:04 from Farhat Lectures’ “What Is GAAP? Explained. CPA Exam and Intermediate Accounting.” Watch on YouTube.

The 4 levels of the FASB Codification

Level	What it tells you	How to think about it
Topic	The broad accounting subject.	Choose the subject area.
Subtopic	A division within the topic, often by scope or transaction type.	Narrow the subject.
Section	The type of guidance, such as recognition, measurement, or disclosure.	Choose the question you need answered.
Paragraph	The specific passage containing the guidance.	Read the actual requirement and its context.

An overall subtopic often contains guidance that applies broadly within a topic. Other subtopics may address a narrower set of transactions. A section then separates the guidance by purpose. For example, a measurement question is different from a disclosure question even when both involve the same asset.

A complete paragraph citation follows the pattern ASC XXX-YY-ZZ-PP. The letters here are placeholders: XXX represents the topic, YY the subtopic, ZZ the section, and PP the paragraph. Actual references use numbers and may include letters or additional subdivisions. Use the citation’s structure before trying to memorize specific codes.

How Topic numbers are grouped into nine Areas

The first digit of a Topic number tells you which Area it belongs to. Here are the nine Areas, their Topic-number ranges, and a few Topics you will meet in intermediate accounting.

Area	Topic numbers	Examples
General Principles	105	ASC 105, Generally Accepted Accounting Principles
Presentation	205 to 299	ASC 230 Statement of Cash Flows, ASC 250 Accounting Changes and Error Corrections
Assets	305 to 399	ASC 310 Receivables, ASC 330 Inventory, ASC 350 Intangibles
Liabilities	405 to 499	ASC 450 Contingencies, ASC 470 Debt
Equity	505 to 599	ASC 505 Equity
Revenue	605 to 699	ASC 606 Revenue from Contracts with Customers
Expenses	705 to 799	ASC 718 Stock Compensation, ASC 740 Income Taxes
Broad Transactions	805 to 899	ASC 805 Business Combinations, ASC 842 Leases
Industry	905 to 999	ASC 958 Not-for-Profit Entities, ASC 985 Software

Within a Topic, Subtopic 10 is always called Overall and holds the guidance that applies to the whole Topic. Other Subtopics cover narrower situations.

The section numbers are the same in every Topic

This is the part that saves you the most time. The FASB uses the same two-digit Section numbers in every Topic, so once you learn them you can jump straight to the kind of guidance you need.

Section	Name	The question it answers
05	Overview and Background	What is this Topic about?
10	Objectives	What is the guidance trying to achieve?
15	Scope and Scope Exceptions	Does this Topic apply to my transaction?
20	Glossary	What do the defined terms mean?
25	Recognition	When do I record it?
30	Initial Measurement	What amount do I record at first?
35	Subsequent Measurement	How does the amount change later?
40	Derecognition	When do I remove it from the books?
45	Other Presentation Matters	Where does it appear in the financial statements?
50	Disclosure	What must I say in the notes?
55	Implementation Guidance and Illustrations	Are there examples?
60	Relationships	Which other Topics are connected?
65	Transition and Open Effective Date Information	When does new guidance take effect?

A few housekeeping Sections also exist (00 Status, 70 Grandfathered Guidance, 75 XBRL Elements), and SEC content appears in Sections that carry the same numbers with an S in front, such as S99 SEC Materials.

One-sentence takeaway: in ASC 310-10-35, the 35 tells you, before you read a word, that you are looking at subsequent measurement guidance for receivables.

FASB Codification example: reading an ASC reference

Consider ASC 310-10-35. This points to Topic 310, Receivables; Subtopic 10, Overall; and Section 35, Subsequent Measurement. It identifies a section, rather than one specific paragraph. You still need to read the relevant paragraphs and determine whether they apply to the facts.

Notice how the address becomes more specific as you move right. “310” identifies the subject. Adding “10” narrows the location to the overall subtopic. Adding “35” identifies the subsequent-measurement section. A paragraph number would take you to a particular passage within that section.

This example teaches how an address works. It does not mean every receivables question is answered in the same section. Start with the transaction and the issue, then confirm the guidance’s scope and any related references. You can consult the FASB’s Codification user guide for help using the research system.

How to access the FASB Codification

The Codification is free. In February 2023, the Financial Accounting Foundation, which oversees the FASB, eliminated the paid Professional View subscription and opened full access to the public. Here is how to use it.

1. Go to asc.fasb.org and create a free account.
2. Browse by Area and Topic, or search by Topic number or keyword.
3. Open the Topic, start with Subtopic 10 (Overall), and then pick the Section you need, such as 25 Recognition or 50 Disclosure.
4. Check the Section 20 glossary or the Master Glossary for any defined term. A defined term often has a narrower meaning than its everyday use.

If a textbook or older study guide tells you to choose between a Basic View and a Professional View, that advice is out of date. There is now one free version for everyone.

How to research a question in the FASB Codification

Step 1: State the accounting issue. Write a specific question. “How should this item be measured after initial recognition?” gives you a clearer research target than “Tell me everything about assets.” A clear question helps you identify the appropriate section.

Step 2: Identify the relevant topic and subtopic. Use the transaction’s substance and check the scope guidance, which is the part of a Topic (usually Section 15) that says which transactions the Topic covers and which it excludes. An account name is a useful starting point, but similar words do not guarantee that the guidance applies to your situation.

Step 3: Open the appropriate section. Ask whether you need recognition, initial measurement, subsequent measurement, presentation, or disclosure guidance. Read the surrounding paragraphs and follow relevant cross-references. Do not stop at the first sentence that appears to support your answer.

Step 4: Apply the guidance to the facts. Explain the connection between the requirement and the transaction. A strong student answer gives both a citation and reasoning. Copying a reference number without explaining its relevance does not show that you understand the accounting.

Step 5: Check timing. Determine which guidance applies for the entity and reporting period. Amendments can have future effective dates. Research requires attention to the version of the guidance as well as the topic number.

What if no specific authoritative guidance addresses the issue?

First consider authoritative GAAP for similar transactions or events, unless applying it by analogy is prohibited. Then consider relevant nonauthoritative literature, such as FASB Concepts Statements, IFRS, and professional literature. These sources do not override applicable U.S. GAAP. See ASC 105-10-05-2 through 05-3, reproduced in FASB Statement 168, Appendix B (PDF).

FASB Codification vs Accounting Standards Update

Term	Purpose	Student takeaway
ASC	Organizes authoritative accounting guidance recognized by FASB for nongovernmental entities.	Research the applicable accounting requirements here.
ASU	Communicates how and why the Codification is amended and when changes apply.	Use it to understand a change; the ASU itself is not authoritative.
Concepts Statement	Explains objectives and concepts used in developing standards.	It does not establish GAAP or override the Codification.

For a fuller explanation of the document types, read what an Accounting Standards Update does. If you first need the purpose of the reporting framework, review what GAAP means.

The Codification’s original purpose was to organize and integrate existing authoritative guidance, rather than create a new accounting treatment simply by reorganizing it. The FASB keeps it current by issuing Accounting Standards Updates, which amend the Codification as standards change. Keep that original organizational purpose separate from later amendments to its content.

Why the FASB Codification matters for the CPA Exam

If you are preparing for the FAR section, two things are worth knowing.

First, the ideas behind the Codification are testable. Questions can ask which sources of GAAP are authoritative, what to do when no specific guidance exists (that is ASC 105), and whether a Concepts Statement or an Accounting Standards Update counts as GAAP. The answers are on this page.

Second, the way you use the literature on the exam changed in January 2024. The old stand-alone research simulation, with its separate authoritative literature tab, was retired. When a task-based simulation needs a standard, the exam now gives you the relevant excerpt as an exhibit, and your job is to read it and apply it to the facts. Knowing the Section numbers helps here, because a glance at 25, 35, or 50 tells you whether you are looking at recognition, subsequent measurement, or disclosure guidance.

You can still practice with the real literature for free. Candidates with a valid Notice to Schedule can request a six-month professional literature subscription through the Professional Literature tab in their NASBA CPA Candidate Account. And since the Codification itself is free at asc.fasb.org, you can look up Topics any time.

Study tip: never stop at the Topic number. Open Section 15 (Scope) before you trust a citation, because the exam rewards applying the right paragraph to the right facts, not finding a number that sounds close.

For more FAR practice, see the FAR test bank or work through the full Intermediate Accounting course.

Interactive FASB Codification quiz

This quiz has five multiple-choice questions. They cover the four citation levels, reading an ASC reference such as ASC 310-10-35, choosing the right Section for a recognition or disclosure question, and what to do when no specific guidance exists. Each question has a hint and a full explanation, and you can retake it as many times as you like.

Need a refresher? Review the four Codification levels or the accounting research method, then try again. Back to On this page.

FASB Codification practice questions: find the level

1. Which level contains the broad accounting subject? The topic. It is the first level in the address. A topic gets you to the subject area, but you usually need a more specific location to support a conclusion.

2. Does ASC 310-10-35 identify one paragraph? No. It identifies a topic, subtopic, and section. A paragraph reference would add another part to the address.

3. A student cites a paragraph but ignores its scope. Is the conclusion necessarily correct? No. The guidance must apply to the transaction. A precise citation cannot fix a mismatch between the requirements and the facts.

Key takeaways

• The FASB Codification is the single source of authoritative U.S. GAAP for nongovernmental entities, and SEC rules also apply to SEC filers.
• Every citation has four levels: Topic, Subtopic, Section, Paragraph, written as ASC XXX-YY-ZZ-PP.
• About 90 Topics are grouped into nine Areas, and the first digit of a Topic number tells you the Area.
• Section numbers mean the same thing in every Topic: 15 is scope, 25 is recognition, 30 and 35 are measurement, 50 is disclosure.
• An Accounting Standards Update explains a change; the amended Codification paragraph is what you cite.
• The Codification has been free at asc.fasb.org since February 2023.
• Always confirm scope and effective date before relying on a paragraph.

Frequently asked questions about the FASB Codification

What does ASC stand for?

ASC stands for Accounting Standards Codification. It is the name of the organized body of accounting guidance, not the name of the standard-setting organization. The organization is the FASB.

Does the Codification cover governmental accounting?

No. The FASB Codification covers nongovernmental U.S. GAAP. State and local governments follow standards set by the Governmental Accounting Standards Board (GASB), and the federal government follows the Federal Accounting Standards Advisory Board (FASAB).

Is every explanation of GAAP authoritative?

No. Textbooks, blogs, and other educational material, including this page, can help you learn, but they do not replace the authoritative guidance. ASC 105-10-05-3 lists textbooks and articles as nonauthoritative. When it matters, check the wording yourself at asc.fasb.org.

How many Topics are in the FASB Codification?

About 90. They are grouped into nine Areas: General Principles, Presentation, Assets, Liabilities, Equity, Revenue, Expenses, Broad Transactions, and Industry. Each Topic has a three-digit number, such as ASC 606 for revenue or ASC 842 for leases.

When did the FASB Codification take effect?

The FASB launched the Codification on July 1, 2009. Under FASB Statement No. 168, it became the single source of authoritative nongovernmental U.S. GAAP for interim and annual periods ending after September 15, 2009.

Is the FASB Codification free?

Yes. In February 2023 the Financial Accounting Foundation eliminated the paid Professional View subscription and opened full access to everyone at asc.fasb.org. You only need to create a free account.

What did the Codification replace?

It superseded all previously issued nongovernmental GAAP literature, including FASB Statements, FASB Interpretations, FASB Technical Bulletins, FASB Staff Positions, EITF Abstracts, APB Opinions, Accounting Research Bulletins, and AICPA Statements of Position. Those documents are now history. The Codification was not meant to change GAAP, only to reorganize it.

Is an Accounting Standards Update authoritative?

No. An ASU explains how and why the FASB is amending the Codification and when the change takes effect. Once the amendment is written into the Codification, you cite the ASC paragraph, not the ASU. For example, ASU 2014-09 created Topic 606, but you cite ASC 606, not the ASU.

How do I cite the FASB Codification?

Use the four-part address: Topic, Subtopic, Section, Paragraph. For example, ASC 606-10-25-1 means Topic 606 (Revenue from Contracts with Customers), Subtopic 10 (Overall), Section 25 (Recognition), paragraph 1, which lists the criteria for a contract with a customer. In a paper or memo, write FASB ASC 606-10-25-1 the first time and ASC 606-10-25-1 after that.

About the author. Mansour Farhat, CPA, CIA, DBA, teaches intermediate accounting and CPA exam review through Farhat Lectures and the Farhat Lectures YouTube channel. The practice questions and research method on this page come from his classroom and review-course teaching.