Chapter 1 Section 1: Accounting Standards and Conceptual Frameworks Flashcards
Who is ultimately responsible for standard setting in the United States?
The SEC, but they let the profession self-regulate through FASB
What is the single source of authoritative non-governmental GAAP?
FASB Accounting Standards Codification
What standard setters contribute to the Codification?
FEDPRIA
FASB Emerging Issues Task Force (EITF) Derivative Implementation Group Issues Accounting Principles Board Opinions Accounting Research Bulletins Accounting Interpretations American Institute of CPAs (AICPA)
Who makes adjustments to GAAP to make it more realistic for private companies?
Private Company Council
What is used for the ongoing standard-setting process? Is it authoritative?
Accounting Standards Updates
No - it just holds the background and reasoning for changes that go into the Codification
What is the international counterpart to FASB?
IASB
How many people must approve an IFRS before it is made official?
Nine members of the IASB
What is the international counterpart to the Accounting Standards Updates?
Conceptual Framework for Financial Reporting
What is the objective of financial reporting?
Provide financial information about the reporting entity that is useful to the primary users of general purpose financial reports in making decisions about providing resources to the entity.
What are the two fundamental qualitative characteristics of useful financial information?
Relevance and Faithful Representation
What goes into Relevance?
Passing Confirms Money
Predictive Value
Confirming Value
Materiality
What goes into Faithful Representation?
Completeness
Neutrality
Freedom from Error
What are the four enhancing qualitative characteristics?
Compare & Verify in Time to Understand
Comparability
Verifiability
Timeliness
Understandability
What is the biggest constraint on information provided in financial reporting?
The cost constraint
What is the only assumption IFRS makes about financial reporting?
Going concern
