Chapter 1

Question 1

What is FAF?

Answer 1

Financial Accounting Foundation (FAF), It oversees the following bodies involved in the establishment of U.S. GAAP for nongovernmental entities

Question 2

What are ASUs?

Answer 2

Accounting Standards Updates (ASUs)

Question 3

When an ASU has been incorporated into the FASB’s…..

Answer 3

ASC, it has the status of U.S. GAAP.

Question 4

IFRS are more or less detailed than FASB?

Answer 4

Less

Question 5

What is FASAB

Answer 5

The FASAB establishes accounting principles for the federal government

Question 6

Primary users of financial information are

Answer 6

current or potential investors and creditors

Question 7

NFP’s report

Answer 7

net assets rather than equity (Assets – Liabilities).

Question 8

Define Economic-entity assumption

Answer 8

The reporting (accounting) entity is separately identified for the purpose of economic and financial accountability

Question 9

Define Going-concern assumption

Answer 9

Unless evidence indicates otherwise, every business is assumed to be a going concern that operates indefinitely

Question 10

Define Monetary-unit assumption

Answer 10

Accounting records are kept in terms of money

Question 11

Define Periodicity assumption

Answer 11

Economic activity can be divided into distinct time periods

Question 12

Define Conservatism constraint

Answer 12

When alternative accounting methods are appropriate, the one with the less favorable effect on net income and total assets is preferable

Question 13

List the fundamental qualitative characteristics

Answer 13

Relevance
* Predictive value
* Confirmatory value
* Material
Faithful representation
* Completeness
* Neutrality
* Free from error

Question 14

List the enhancing qualitative characteristics

Answer 14

Enhancing

• Compatibility
• Verifibile
• Timeliness
• Understandibility

Question 15

List the recognition criteria

Answer 15

• Definition
• Measurable
• Relevant
• Reliable

Question 16

When should revenue be recongized

Answer 16

1. realizable

2. earned

Question 17

Define Expected present value

Answer 17

the sum of the present values of estimated cash flows discounted using the same interest rate and weighted according to their probabilities.

Question 18

Regulation S-X

Answer 18

applies to the reporting of interim and annual financial statements, including notes and schedules.

Question 19

Regulation S-K

Answer 19

provides disclosure standards, including many that are nonfinancial.

Question 20

Regulation S-B

Answer 20

applies to small business issuers and nonaccelerated filers.

Question 21

Regulation S-T

Answer 21

governs the types of documents the SEC requires to be filed electronically.

Question 22

When must form 10K be filed

Answer 22

(a) 60 days of the last day of the fiscal year by large accelerated filers ($700 million or more in publicly held stocks, i.e., shares held by the public and not insiders), (b) 75 days by accelerated filers ($75 million to $700 million), and (c) 90 days by nonaccelerated filers (less than $75 million).

Question 23

When must form 10Q be filed

Answer 23

(a) 40 days of the last day of the first three fiscal quarters by large accelerated filers ($700 million or more in publicly held stocks) and accelerated filers ($75 million to $700 million) and (b) 45 days by nonaccelerated filers (less than $75 million).

Question 24

When must form 8K be filled

Answer 24

It must be filed within 4 business days after the material event occurs.