Chapter 1

Question 1

Probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events

Answer 1

assets

Question 2

Probable future sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events

Answer 2

Liabilities

Question 3

Shareholders’ equity or stockholders’ equity for a corporation is the residual interest in the assets of an entity that remains after deducting its liabilities

Answer 3

Equity (or net assets)

Question 4

Increases in equity of a particular business enterprise resulting from transfers to it from other entities of something of value to obtain or increase ownership interests in it

Answer 4

Investments by owners

Question 5

Decreases in equity of a particular enterprise resulting from transfers to owners

Answer 5

Distributions to owners

Question 6

The change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners

Answer 6

Comprehensive income

Question 7

Inflows or other enhancements of assets of an entity or settlements of its liabilities during a period from delivering or producing goods, rendering services, or other activities that constitute the entity’s ongoing major or central operations

Answer 7

Revenues

Question 8

Outflows or other using up of assets or incurrence of liabilities during a period from delivering goods, rendering services, or other activities that constitute the entity’s ongoing major or central operations

Answer 8

Expenses

Question 9

Increases in equity from peripheral or incidental transactions of an entity

Answer 9

Gains

Question 10

Decreases in equity arising from peripheral or incidental transactions of an entity

Answer 10

Losses

Question 11

What is the objective of general purpose financial reporting?

Answer 11

To provide useful financial information about companies to capital providers, investors, and creditors, for decision making

Question 12

Who is likely to be the most direct beneficiary of the guidance provided by the Concepts statements?

Answer 12

FASB

Financial Accounting Standards Board

Question 13

Are the Concepts Statements part of GAAP?

Answer 13

NO!

Question 14

Who are the primary users of general purpose financial reports?

Answer 14

Investors, creditors, and other lenders

Question 15

ASC Section 05

Answer 15

Overview and Background

Question 16

ASC Section 10

Answer 16

Objectives

Question 17

ASC Section 15

Answer 17

Scope and Scope Exceptions

Question 18

ASC Section 20

Answer 18

Glossary

Question 19

ASC Section 25

Answer 19

Recognition

Question 20

ASC Section 30

Answer 20

Initial Measurement

Question 21

ASC Section 35

Answer 21

Subsequent Measurement

Question 22

ASC Section 40

Answer 22

Derecognition

Question 23

ASC Section 45

Answer 23

Other Presentation Matters

Question 24

ASC Section 50

Answer 24

Disclosure

Question 25

ASC Section 55

Answer 25

Implementation Guidance and Illustrations

Question 26

ASC Section 60

Answer 26

Relationships

Question 27

What are the two fundamental qualitative characteristics of useful financial information?

Answer 27

Relevance and Faithful Representation

Question 28

What is the (complete) name of the document in which U.S. GAAP are published?

Answer 28

Financial Accounting Standards Board (FASB) Accounting Standard Codification (ASC)

Question 29

FASB ASC 310-10-25-2
Identify the following:
\_\_\_\_\_ paragraph
\_\_\_\_\_ section
\_\_\_\_\_ topic
\_\_\_\_\_ subtopic

Answer 29

Paragraph- 2
Section- 25
Topic- 310
Subtopic- 10

Question 30

What is the conceptual framework?

Answer 30

According to FASB ASC… “a coherent system of interrelated objectives and fundamental concepts that prescribes the nature, function, and limits of financial accounting and reporting that is expected to lead consistent guidance.”

Question 31

Who is likely to be the most direct beneficiary of the guidance provided by Concepts Statements?

Answer 31

The Board

Question 32

In which concept statement and corresponding paragraph number would one find the objective of financial reporting?

Answer 32

CON 8, paragraph OB2

Question 33

According to FASB, what three informational items are needed to “assess an entity’s prospects for future net cash flows?”

Answer 33

1. The resources of the entity
2. Any claims against the entity
3. The level of efficiency and effectiveness through which the governing board has carried out their responsibilities and handled the entity’s resources

Question 34

Are general purpose financial reports designed to show a reporting entity’s value?

Answer 34

No.

Question 35

Name 2 groups that are NOT considered by FASB to be primary users of general purpose financial reports

Answer 35

1. Regulators

2. General members of the public

Question 36

What is represented in information about a reporting entity’s financial position?

Answer 36

Info about changes in economic resources and claims and financial info reflected by prior cash flows

Question 37

What type of accounting best reflects “financial performance?”

Answer 37

Accrual accounting

Question 38

State the definition of “recognition” and the concept statement the corresponding paragraph number where the definition is found within the Statement of Financial Accounting Concepts

Answer 38

Recognition is “the process of formally recording or incorporating an item into the financial statements of an entity as an asset, liability, revenue, expense, or the like.”

CON 5, paragraph 8

Question 39

ASC Topic 310

Answer 39

Receivables

Question 40

How many digits are in a subtopics code?

Answer 40

2

Question 41

How many digits are in a topic code?

Answer 41

3