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Accounting > Chapter 1 Stice > Flashcards

Chapter 1 Stice Flashcards

1
Q

How did GAAP Evolve

A

Start with Stock Market crash of 1929, SEC formed 1933 and 1934 acts

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2
Q

Committee on Accounting Procedures CAP

A

1939-1959 Pronouncements: accounting research bulletins

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3
Q

Accounting Principles Board APB

A

1959-1973 Pronouncements APB Opinions

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4
Q

Financial Accounting Standards Board FASB

A

Begin in 1973-Is the current standards, Pronouncments: Statements of Financial Accounting Standards or SFAS

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5
Q

SEC

A

Securities and Exchange Commission-Established standardize Accounting. Granted legal authority to establish GAAP. Tends to defer setting GAAP to the accounting profession. Governs the issue and trading securities.

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6
Q

SEC Requirements

A

Requires annual, quarterly, and special event filings (10-K(annual), 10-Q(quarterly), 8-K(any significant information that should be disclosed) respectively)

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7
Q

SEC Standards

A

Issues its own standards, Financial Reporting Releases FRR

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8
Q

SEC interpretations

A

Staff Accounting Bulletins SAB

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9
Q

What does FASB stand for?

A

Financial Accounting Standards Board.

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10
Q

FASB

A

Private-sector body responsible for establishment of U.S. accounting standards also known as GAAP

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11
Q

How many full time members are employeed by FASB

A

7 full time members trawn from a variety ofbackgrounds- auditing, corporate accounting, financial, and academia. Members are required to sever all connections with their institutions prior to assuming membership on the board

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12
Q

Who appoints new members to the FASB

A

Appointng new members is done by the Financial Accounting Foundation FAF

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13
Q

SFAS?

A

SFAS -Statement of Financial accounting standards-Guidance on specific technical accounting and reporting issues.

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14
Q

SFAC?

A

Statements of Financial Accounting Concepts-Broad conceptual Framework-Serves as basis for developing SFAS

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15
Q

EITF?

A

Emerging Issues Task Force-Guidance on issues, generally industry specific, for things taht need quick resolution (surrogate GAAP until issue addressed)

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16
Q

FASB’s Process?

A

Process is lengthy and incluedes, hold meetings, develop preliminary views report; review public comment letters, develop exposure drafts (ED); review of more public comments; then issue SFAS, revise ED, or abandon project.

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17
Q

Standards Enforcement?

A

FASB has no enforcement POWER, all power lies with SEC. FASB process can be very political

18
Q

AICPA

A

American Institute of Certified Public Accountants; Administers and grades the Uniform CPA Exam, Code of professional conduct, continuing Professional Education CPE)

19
Q

CPA requirements for GA

A

BBA (120 hours) 30 hours of acctg, 24 hours. Total of 150 hours general business. 1 year continuous experience in public accounting, industry, government or college teaching (Min of 2000 hours)

20
Q

AAA?

A

American Accounting Association

21
Q

IRS

A

Internal Revenue Service-TAX rules

22
Q

IASB

A

International Accounting Standards Board. Formed in 1973 to develop worldwide accounting standards. Similar to FASB, IASB develops proposals, circulates these among interested organizaiont, receives feedback, and issues final pronouncement.

23
Q

How many members sits on board of IASB

A

15 board members from; US, UK, France, Sweden, China, Australia, South Africa, and Japan.

24
Q

IFRS stand for?

A

International Financial Reporting Standards issued by the IASB

25
Q

When did SEC allow non U.S. companies to use IASB standards in the US stock exchange?

A

2008.

26
Q

When did the FASB introduce a new codification of professional standards? SFAS 168?

A

IN 2009. This approach has two categories. Authoritative (FASB Profesional View Standards Codification) and Non-Authoritative

27
Q

What does GAAP stand for?

A

Generally Accepted Accounting Practices

28
Q

What does Conceptual Framework Provide?

A

It provides a theoretical foundation to impose organization and consistency to standard setting process (revision and development standards)

29
Q

What are the four areas that the 7 concept statements address?

A

Objectives; Purpose of financial reporting. 2. Qualitative Charachteristics: qualities of useful information. 3. Elements: define assets, Liabilties, etc. 4. Recognition, measurement and reporting: implementation.

30
Q

What is the Overall Objective of Financial Reporting?

A

USEFULNESS!!! Financial reporting should provide information that is useful to present and potential investors and creditors and other users in making rational investment, credit, and similar decisions.

31
Q

What is the seven objectives of financial accounting?

A

Usefulness, Understandability, Target Audience: Investors and Creditors, Assessing Future Cash Flows, Evaluating Economic Resources, Primary Focus on earnings.

32
Q

Define Understandability?

A

Financial reporting should provide information that is understandable to one who has a reasonable knowledge of accounting and busienss and who is willign to study and analyze the information presented.

33
Q

Target Audience?

A

Target audience are Investors and creditors. While there are many potiential users of finacial reports, the objectives are directed primarily toward investors and creditors.

34
Q

Assessing Future Cash Flows?

A

Financial reporting should provide informatin that is useful in accessing aomoutns, timing, and uncertanity (risk) of prospective cash flows.

35
Q

Evaluating Economic Resources?

A

Financial reporting should also provide informatino about a companys assets, liablities, and owners equity to help investors, creditors, and others evaluate the financial strengths and weaknesses of the enterprise and its liquidity and solvency.

36
Q

Primary focus on Earnings?

A

Information about company earnings, measued by accrual acounting, generally provides a better basis for forcasting future performance than does information about current cash receipts and disbursements.

37
Q

What are the Five Measurement Attributes?

A
  1. Historical Cost 2. Current Replacement Cost, Fair Value, Net Realizable Value, Present (or discounted) Value.
38
Q

What is Recognition?

A

Taking all the estimates and judgements into one number and using that number to make a journal entry

39
Q

What is the Recognition Criteria?

A

For an item to be formally recognized, it must meet one of teh definitinos of the elements of the financial statements. For example, revenue must meet the definition of revenue to be recorded and reported on the income statement.

40
Q

Define Disclosure?

A

Skipping the journal entry and just relying on the note to convey the information to the users.

41
Q

Reporting? Included in the set of G/P financial statements what reports that show the following?

A

Financial position at the end of the period, earnings (net income) for the period; cash flows during the period; investments by the distribution to owners during the period; comprehensive income for the period.

42
Q

How did GAAP Evolve

A

Start with Stock Market crash of 1929, SEC formed 1933 and 1934 acts

Accounting (9 decks)

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