Ch1 conceptual framework

Question 0

Primary qualitative characteristics

Answer 0

Relevance and faithful representation

Question 1

Enhancing qualitative characteristics

Answer 1

Roger is cut like a v
Comparability/consistency
Understandability 
Timeliness
Verifiability

Question 2

Relevance

Answer 2

Capable of making a difference for user
Roger is PC but also materialistic

Predictive
Confirmatory
& materiality

Question 3

Faithful representation

Answer 3

Roger is never on the fenc
Freedom from error
Neutrality
Completeness

Question 4

Equity

Answer 4

Assets left over after deducting liability (net assets)
Consist of:
Contributions/owner investments
Distributions to owners
Comprehensive income-DENT
Derivative cash flow hedges
Excess adjustment of pension PbO & fb of plan assets at yr end
Net unrealized gains or losses on Afd securities
Translation adjustments for foreign currency

Question 5

valuation techniques to measure estimate fair value

Answer 5

Income approach
Market approach
Cost approach

Question 6

Concentration of credit risk

Answer 6

Special risk of multiple and/or large defaults all affected by the same issue. It is required to be disclosed in notes to fun statements

Question 7

Physical capital maintenance concept

Answer 7

Gains and losses are recognized only when assets are disposed or liabilities are settled…generally used in calc currently reported net income

Question 8

Financial capital maintenance concept

Answer 8

Increased or decreased when assets are disposed of or liabilities are settled and when they change in value resulting in holding gains or losses primarily recorded in other comprehensive income

Comprehensive income which includes both net income and comprehensive income

Question 9

Revenue

Answer 9

Increase in asset or decrease in a liability from primary ops

Question 10

Expense

Answer 10

Decrease in asset from primary ops

Question 11

Gains/loss

Answer 11

Increase/decrease in assets or liabilities resulting from incidental transactions

Question 12

Comprehensive income

Answer 12

All changes in equity except for owner-related items

Question 13

Realization

Answer 13

Conversion of an item or service into cash or a claim to cash. It occurs at the time the entity converts a good/service into AR/cash

Question 14

4 types of pronouncements by authority

Answer 14

1. FASB Statements of financial acctg standards
2. FASB interpretations
3. AICPA accounting principles board opinions
4. AICPA accounting research bulletins

Question 15

IFRS extraordinary items

Answer 15

IFRS doesn’t recognize extraordinary items

Question 16

Fright costs & interest

Answer 16

Freight cost capitalize

Interest expense

Question 17

Deferred revenue

Answer 17

Liability so a part of the balance sheet

Question 18

Legal expense to defend patent

Answer 18

If successful capitalize as value of the patent

If unsuccessful expense

Question 19

Financial reporting elements

Answer 19

Assets, liabilities, and equity/net assets

Rev/expenses & gains/losses are elements of comprehensive income which is a component of equity

Question 20

Valuation levels

Answer 20

Level 1: based on observable market transactions for identical assets/liabilities in an active market

Level 2: based on observable market transactions for similar assets/liabilities in an active market when consensus exists on how to value them

Level 3: not based on market data

Question 21

IFRS recognizing an element of fin reporting

Answer 21

Criteria is probability of occurrence and reasonable measurement

For GAAP:
Criteria for recognition is that item conforms to the definition of an element of fin reporting, that it is capable of being measures in monetary terms and that item is relevant and faithfully represented.