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Accounting 301 > Ch. 1 - Financial Accounting And Accounting Standards > Flashcards

Ch. 1 - Financial Accounting And Accounting Standards Flashcards

0
Q

What are the objectives of financial reporting?

A

Provide financial information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors in making decisions in their capacity as capital providers.

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1
Q

What are the characteristics of accounting?

A

The identification, measurement, and communication of financial information about economic entities to interested parties.

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2
Q

What is financial reporting?

A

The financial information a company provides to help users with capital allocation decisions about the company.

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3
Q

What are Users?

A

Investors and creditors that use financial reports to make their capital allocation decisions.

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4
Q

What is Capital Allocation?

A

The process of determining how and at what cost money is allocated among competing interests.

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5
Q

What is the General Purpose of Financial Statements?

A

To provide financial reporting information to a wide variety of users, and to provide the most useful information possible at the least cost.

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6
Q

Who are the Primary User Group?

A

Investors

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7
Q

Resources are what?

A

Limited

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8
Q

Efficient use of resources often determines whether a business does what?

A

Thrives

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9
Q

Investors are interested in assessing the company’s what?

A

Ability to generate net cash inflows, and management’s ability to protect and enhance the capital providers’ investments.

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10
Q

What is Entity Perspective?

A

Companies viewed as separate and distinct from their owners.

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11
Q

Various users need financial information for what?

A

Financial Statements

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12
Q

The accounting profession has attempted to develop what set of standards?

A

Generally Accepted Accounting Principles

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13
Q

What parties are involved in Standard Setting?

A

Securities and Exchange Commission, American Institute of Certified Public Accountants, and Financial Accounting Standards Board.

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14
Q

What is the abbreviation for Securities and Exchange Commission?

A

SEC

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15
Q

What is the abbreviation of American Institute of Certified Public Accountants?

A

AICPA

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16
Q

What is the abbreviation for Financial Accounting Standards Board?

A

FASB

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17
Q

What is the SEC?

A

Established by federal government, encouraged private standard, requires public companies to adhere to GAAP, and enforcement authority.

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18
Q

What is the AICPA?

A

National professional organization that established Committee on Accounting Procedures and Accounting Principles Board.

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19
Q

What is the Committee on Accounting Procedures?

A

1939 - 1959, Issued 51 Accounting Bulletins, and problem-by-problem approach failed.

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20
Q

What is the Accounting Principles Board?

A

1959-1973, issued 31 Accounting Principle Board Opinions, Wheat Committee recommendations adopted in 1973.

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21
Q

Wheat Committee’s recommendations resulted in creation of what?

A

FASB

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22
Q

What is Financial Accounting Foundation?

A

Select members of the FASB, funds their activities, and exercises general oversight.

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23
Q

What is Financial Accounting Standards Board?

A

Mission to established and improve standards of financial accounting and reporting.

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24
Q

What is Financial Accounting Standards Advisory Council?

A

Consult on major policy issues.

25
Q

What are the differences between FASB and APB?

A

Smaller membership, Full-time, remunerated membership, greater autonomy, increased independence, and broader representation.

26
Q

What are the missions of FASB?

A

To establish and improve standards of financial accounting and reporting.

27
Q

What are the types of pronouncements?

A

Standards, Interpretations, and Staff Positions; Financial Accounting Concepts; and Emerging Issues Task Force Statements.

28
Q

What are Staff Positions?

A

Provides additional guidance on implementing or applying FASB standards or Interpretations.

29
Q

What are Interpretations (FASB)?

A

Represent extensions or modifications of existing standards.

30
Q

What is the Statement of Financial Accounting Standards?

A

Primary document of the FASB that establishes GAAP.

31
Q

What is the EITF Standards?

A

Provides guidance on how to account for new and unusual financial transactions that have the potential for creating diversity in financial reporting practices.

32
Q

What are opinions?

A

Official pronouncements of the APB.

33
Q

What are Accounting Pronouncements?

A

Standard setting bodes have issued a number of authoritative pronouncements.

34
Q

What is the first step of the Due Process System of the FASB?

A

Topics identified and placed on Board’s agenda.

35
Q

What is the second step of the Due Process System of the FASB?

A

Research and analysis conducted and preliminary views of pros and cons issued.

36
Q

What is the third step of the Due Process System of the FASB?

A

Public hearing on proposed standard.

37
Q

What is the fourth step in the Due Process System of the FASB?

A

Board evaluates research and public response and issues exposure draft.

38
Q

What is the fifth step of the Due Process System of the FASB?

A

Board evaluates responses and changes exposure draft, if necessary, final standard issued.

39
Q

What does the Statement of Financial Accounting Concepts do?

A

Sets forth fundamental objectives and concepts that will be used in developing future standards.

40
Q

What is the Accounting Standards Executive Committee (AcSEC)?

A

AICPA established this and they are responsible for Audit and Accounting Guides, Statements of Position (SOP), and Practice Bulletins.

41
Q

What does PCAOB?

A

Oversees the development of auditing standards.

42
Q

AICPA and AcSEC no longer issues what?

A

Authoritative accounting guidance for public companies.

43
Q

What are GAAP principles?

A

Principles that have substantial authoritative support.

44
Q

What are the major sources of GAAP?

A

FASB standards, Interpretations, and Staff Positions; APB Opinions; and AICPA Accounting Research Bulletins.

45
Q

What is the goal in developing the FASB codification?

A

It to provide in one place all the authoritative literature related to a particular topic.

46
Q

FASB codification creates on level of GAAP which is considered what?

A

Authoritative

47
Q

What is the Financial Accounting Standards Board Codification Research System (CRS)?

A

FASB developed; is an online real-time database that provides easy access to the Codification.

48
Q

What is the FASB Codification Framework?

A

Topic, subtopics, sections, and paragraphs.

49
Q

What is a topic?

A

Provides a collection of related guidance on a given subject, such as receivables or leases.

50
Q

What is subtopics?

A

Subset of a topic and distinguished by type or scope. For example overall and troubled - debt restructuring are 2 subtopics of receivables.

51
Q

What are sections?

A

Indicate the type of content in a subtopic, such as initial measurement.

52
Q

What are paragraphs?

A

This level is where you will find the substantive content related to the issue researched.

53
Q

What are Financial Reporting Challenges?

A

Non-financial measurement, forward looking information, soft assets, and timeliness.

54
Q

What are the issues in Finanacial Reporting: Expectation GAAP?

A

Difficult to close in light of accounting scandals, Sarbanes-Oxley Act (2002), and Public Company Accounting Oversight Board (PCAOB).

55
Q

What are the two sets of standards accepted for international use?

A

U.S. GAAP, issued by the FASB ; International Financial Reporting Standards (IRFS), issued by the IASB.

56
Q

FASB and IASB recognize that global markets will best be served if how many sets of GAAP are used?

A

One set

57
Q

What are the types of Pronouncements?

A

International Financial Reporting Standards, Framework for Financial Reporting, and International Financial Reporting Interpretations.

58
Q

The International Accounting Standards Board (IASB) is composed of what four organizations?

A

International accounting Standards Committee Foundation (IASCF), International Accounting Standards Board (IASB), Standards Advisory Council, and International Financial Reporting Interpretations Committee (IFRIC).

59
Q

What is the International Organization of Securities Commissions?

A

Does not set accounting standards, and dedicated to ensuring that global markets can operate in an efficient and effective basis.

60
Q

What is International Accounting Standards Board (ISAB)?

A

Issues international financial reporting standards, standards used on most foreign exchanges, standards used by foreign companies listing on U.S. securities exchanges, IFRS used in over 115 countries.

61
Q

What is the hierarchy of IFRS?

A
  1. International Financial Reporting Standards 2. International Accounting Standards 3. Interpretations originated by international Financial Reporting Interpretations Committee (IFRIC) or the former standing Interpretations Committee (SIC).

Accounting 301 (1 decks)

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