Chapter 1: Financial Reporting Environment Flashcards
How can you convert cash receipts to revenue as reported on an accrual basis?
Under accrual basis, revenue is recognized when the good or service is transferred to the customer, therefore, beginning/ending liability balance must be added/subtracted OR the beginning/ending AR balance must be subtracted/added.
What is the current replacement cost?
The amount of cash that would have been paid for a current acquisition of the same or an equivalent asset
What are the enhancing qualitative characteristics?
Enhancing comparability verifies timely understanding.
Enhancing
Comparability
Verifiability
Timeliness
Understandability
What are the fundamental qualitative characteristics?
Relevance - predictive value, confirmatory value, materiality
Faithful representation - completeness, neutrality, freedom from error
What are the four fundamental recognition criteria for an item to be recognized?
1) The item meets the definition of an element of a financial statement 2) measurability with sufficient reliability 3) the information is relevant 4) the information must be reliable.
What does Regulation S-X cover?
Governs the form and content of financial statements and financial disclosure, such as balance sheet, income statement, shareholders equity statement, cash flow statement, and footnotes
What does Regulation S-K cover?
It governs the form and content of non-financial disclosures, such as the description of the business, management’s discussion and analysis (MD&A) information on management.
What is a large accelerated filer?
A company with market value of $700 million or more.
When does a large accelerated filer need to file the 10-K and the 10-Q?
The 10-K within 60 days of fiscal year end and the 10-Q within 40 days of the end of the quarter.
What is an accelerated filer?
A company with market value between $75 and $700 million and annual revenues of $100 million or more.
When does an accelerated filer need to file the 10-K and 10-Q?
The 10-K within 75 days of fiscal year end and the 10-Q within 40 days of the end of the quarter.
What is a non-accelerated filer?
A company with a market value less than $700 million with annual revenue of less than $100 million, or a market value of less than $75 million.
When does a non-accelerated filer need to file the 10-K and the 10-Q?
The 10-K within 90 days of fiscal year end and the 10-Q within 45 days of the end of quarter.
