002 GAAP & Accrual Accounting

Question 1

What topics does the Financial Accounting Standards Board (FASB) Accounting Standards Codification not include?

Answer 1

1. Other comprehensive basis of accounting; 2. Cash basis; 3. Income tax basis; 4. Regulatory accounting principles.

Question 2

What purpose does the Financial Accounting Standards Board (FASB) Accounting Standards Codification serve?

Answer 2

The FASB Accounting Standards Codification is the sole source of authoritative U.S. Generally Accepted Accounting Principles for nongovernmental entities, except for the Securities Exchange Commission guidance.

Question 3

What are long-term assets?

Answer 3

Assets that are not classified as current assets. Long-term assets are reported on the balance sheet and represent a company’s property, equipment, and other capital assets (reduced by depreciation) expected to be useable for more than one year.

Question 4

What is the Accounting Principles Board?

Answer 4

The entity that published thirty-one opinions, some of which are now part of the Codification.

Question 5

What is the classification of assets that are in the form of cash, or will be converted into cash, or consumed within one year or the operating cycle of the business, whichever is longer?

Answer 5

The classification is current assets.

Question 6

What are the seven key components of the general purpose external financial report?

Answer 6

Income Statement;
    Balance Sheet;
    Statement of Cash Flows;
    Statement of Retained Earnings;
    Statement of Comprehensive Income;
    Footnote Disclosures;
    Auditor's Opinion.

Question 7

When is revenue recognized under accrual accounting?

Answer 7

Revenues are recognized when earned and collection is reasonably assured, regardless of the period of cash collection.

Question 8

When are expenses recognized under accrual accounting?

Answer 8

Expenses are recognized when incurred, regardless of the period of cash payment.

Question 9

Which agency enforces Generally Accepted Accounting Principles (GAAP)?

Answer 9

Securities and Exchange Commission (SEC).

Question 10

What body developed Generally Accepted Accounting Principles (GAAP)?

Answer 10

The Financial Accounting Standards Board (FASB).

Question 11

What does Generally Accepted Accounting Principles (GAAP) address?

Answer 11

Recognition, measurement, and disclosure.