Intermediate Accounting GAAP Discussion

The Statement of Financial Accounting Standard (SFAS) # 120 is a statement focusing on the accounting and reporting for mutual life insurance enterprises. The primary function of an insurance enterprise is to provide a means of economic protection for its customers from risks that may occur or are discovered in a specified period. The types of risks that may be incurred and covered by an insurance company are death, disability, damage to property, injury to others (in …

…dealing with the same subject matter that come before it to be more inclusive of mutual life insurance enterprises, where permitted. The clause included in this statement found in paragraph five excludes certain contracts not only those from mutual life enterprises but other insurance enterprises as well. While statement 120 may not be creating any new methods of accounting in and of itself, it does reiterate the underlying foundations of accounting, which are consistency and concisiveness.