Chapter 1 Flashcards
The 5 statements are:
1) balance sheet
2) income statement
3) statement of cash flows
4) stock holders equity
5) statement of comprehensive income
GAAP stands for…..
Generally Accepted Accounting Principles
S.EC stands for…..
Securities and exchange
What is FASB?
Financial Accounting Standards Board
What is IASB?
International Accounting Standards Board
What is IFRS?
International Financial Reporting Standards
Objective of financial reporting:
Provide useful financial information about the reporting entity to present and potential equity investors, lenders, and other creditors in decisions about providing resources to the entity.
Identifies investors and creditors as the primary users for general-purpose financial statements.
What is the GAAP?
It is the common set of standards and procedures of Accounting.
What does the securities and exchange do?
Help develop and standardize financial information presented to stockholders.
Established by federal government.
Relies on Financial Accounting Standard Board (FASB) to develop accounting standards.
What is AICPA?
American Institute of Certified Public Accountants, a national professional organization of practicing CPA’s
Capital allocation is…
The process of determining how and what cost money is allocated among competing interests.
APB Opinions:
Opinions intended to be mainly based on research studies and be supported by reason and analysis.
Decision usefulness:
Investors are interested in financial reporting that is useful in making decisions.
Investors are interested in:
1) company’s ability to generate net cash flows
2) managements ability to protect and enhance the capital providers investments.
What is Financial Accounting?
Process that culminates in the preparation of financial reports on the enterprise for use by both internal and external reports.
GAAP was issued by:
Financial Accounting Standards Board and governmental Accounting Standards Board
Who exercises oversight of FASB?
Securities and Exchange (SEC)
Who has oversight of the actions of IASB?
IOSCO (international organization of securities commissions)
What similarities does IASB and FASB have?
Governance structure, foundation that provides oversight, a board, advisory council, and interpretations committee.
True or false: AAP is the term used to indicate the whole body of FASB literature
TRUE
True or false: any company claiming compliance with gap must comply with most standards and interpretations but does not have to follow the disclosure agreements
FALSE
True or false: the primary governmental body that has influence over the FASB is the SEC
TRUE
The FASB has a government mandate and therefore dues not have to follow due process in issuing a standard
FALSE
Identity if statements are true on false:
1.) The objective of financial statements emphasizes a stewardship approach for reporting financial information.
2.) the purpose of the objective of financial reporting is to prepare a balance sheet, an income statement, a statement of cash flows, and a statement of owners’ or stockholders’ equity.
3.) because they are generally shorter, FASB interpretations are subject to less due process, compared to FASB standards.
4.) The objective of financial reporting uses an entity rather than a proprietary approach in determining what information to report.
1.) FALSE
2.) FALSE
3.) FALSE
4.) TRUE
Accounting standards setters use the following process in establishing accounting standards.
Research, exposure draft, discussion paper, standard.
GAAP is compromised of:
Any accounting guidance included in the FASB codification.
The authoritative status of the conceptual framework is as follows:
It it’s used when there is no standard or interpretation related to the reporting issues under consideration.
