CH 1 Review Flashcards
what are the two different types of accounting research?
applied and academic
what is applied research
research done in practice to account for transactions in conjunction with the preparation of financial statements
what is academic research
research often performed by phds and looks at broader trends
what is another name for applied research
technical accounting research
what are some examples of environments in which accounting research would be perfromed
-public companies
- nonpublic/ private companies
- governmental entities
- tax reporting
what is auditing/ professional standards research
when auditors perform research to understand the requirements for their own professional conduct
Who are the parties typically performing accounting research?
-corporate accountants
-auditors
-regulators
-investors
attorneys
when is the ideal time to perform accounting research?
before a transaction occurs
why is it ideal to do accounting research prior to a transaction?
- if they do the deal what impact will it have on ST and LT earnings estimates
-to consider whether the FS impacts of the transaction as it is currently drafted are acceptable
-time to review the anticipated accounting treatment with auditors - to comply with any associated “contemporaneous” documentation requirements
what are some examples of transactions that may be researched before their execution
-investments
-sales of new products
- partnerships with other entities
- lease agreements
- sales of land, property
- issuance of new class of equity, debt, or “hybrid” securities (like convertible debt)
research can also be preformed at the time a transaction is __________
executed
why would a company do accounting research at the time the transaction is executed?
- limited accounting resources/ smaller operations
- new information become known about existing financial statement accounts /estimate
- the transaction is confidential, time sensitive or couldn’t have been anticipated
- final contract terms differ from draft terms
research may also be performed after ____________
FS issuance
when would is be necessary to do accounting research after FS issuance
respond to regulator inquiries, investor inquiries or litigation
research can be performed by _________ with an interest in shaping future policy
stakeholders
examples of statutory sources
- Internal Revenue Code
- Other statues with tax related provisions
examples of administrative sources
- treasury regulations
- IRS revenue rulings
- written admin agency determinations
examples of judical sources
- supreme court
- court of appeals
district courts
court of federal claims
tax court
The securities and exchange commission is best known for its ______________ acitivites
enforcement
what are the five divisions of the SEC
- corporate finance
- trading and markets
- investment management
- enforcement
- economic and risk analysis
what are staff accounting bulletins (SABs) and Financial Reporting Releases (FRRs)
accounting guidance issued by the SEC for public companies
Who oversees FASB
Financial Accounting Foundation (FAF)
what does FASB stand for
Financial Accounting Standards Board
is guidance issued by FASB authoritative
yes
