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Conceptual Framework Flashcards

1
Q

Who establishes GAAP?

A

FASB

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2
Q

Who has legal authority to establish GAAP

A

SEC

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3
Q

Who is subject to SEC rules and regulations?

A

All companies that issue securities in the US

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4
Q

F.A.S.B?

A

Financial Accounting Standards Board

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5
Q

Who establishes GAAP?

A

FASB

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6
Q

What is the FASB Accounting Standards Codification?

A

Single source of authoritative nongovernmental GAAP

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7
Q

If accounting and financial reporting practices are not included in the Codification then they are…

A

NOT GAAP

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8
Q

What Authoritative Literature is Included in Codification (Mnemonic)?

A

FEDPRIA

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9
Q

F in FEDPRIA

A

FASB

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10
Q

E in FEDPRIA

A

EITF Force Abstracts and Topic D

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11
Q

D in FEDPRIA

A

Derivative implementation Group Issues

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12
Q

P in FEDPRIA

A

Accounting principles board opinions

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13
Q

R in FEDPRIA

A

Accounting research bulletins

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14
Q

I in FEDPRIA

A

Accounting interpretations

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15
Q

A in FEDPRIA

A

AICPA

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16
Q

External users include:

A

Investors, Lenders, Creditors

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17
Q

Relevance Factors

A

Predictive value, Confirming value, Materiality

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18
Q

What are the enhancing qualitative characteristics?

A

Comparability, Verifiability, Timeliness, and Understandability

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19
Q

Full set of financial statements includes (5)

A

Balance sheet, Income Statement, Stmt of comprehensive income, Stmt of cash flows, Stmt of owners’ equity

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20
Q

Conservatism principle general rules

A

1 Recognize revenue/gains when earning process is complete

2 Recognizes expense/loss immediately

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21
Q

REGL on income statement

A

Revenue, expenses, gains, losses

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22
Q

ALE on balance sheet

A

Assets, liabilities, equity

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23
Q

Investments by owners`

A

Increase in assets from transfers of cash, property, or services from owners

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24
Q

Distribution to owners

A

Decreases in assets from transfers of cash, property or services or the incurrence of a liability to owners

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25
What is the purpose IASB?
Develop a single set of high-quality, global accounting standards
26
Accounting standards updates aren't authoritative literature
but instead they provide 1) Background information 2) Update the codification 3) Describe the basis for conclusion for changes in the codification
27
The IFRC provided guidance on...
Newly identified financial reporting issues not addressed by IFRS
28
The IFRC help assist the....
IASB in achieving international convergence of accounting standards
29
IFRIC stands for
International financial report interpretations committee
30
What is IFRS?
Single set of accounting standards for the globe
31
What is the goal of the convergence of GAPP and IFRS?
A single set of high quality international accounting standards that a company can use for domestic and cross border financial reporting
32
Neutrality
Free from bias
33
Free from error
No error in the application of rules
34
Enhancing Qualitative Characteristics (mnemonic)
Compare and verify in time to understand
35
Comparability provides... (Example)
Consistency current vs. prior year
36
Different knowledgeable and independent observers cam reach consensus that a particular depiction is faithfully represented
Verifiability
37
Info is available to users in time to be capable of influencing their decisions
Timeliness
38
The cost constraint
Benefit greater than cost
39
Economic activity can be accounted for when considering an identifiable set of activities
Entity assumption
40
It's presumed that the entity will continue to operate in the foreseeable future
Going concern assumption
41
It is assumed that money is the appropriate basis by with to measure economic activity
Monetary unit assumption
42
Economic activity can be divided into meaningful time periods
Periodicity assumption
43
Revenue recognition principle
Revenue should be recognized when it's earned and realized or reliable
44
What does it mean to accrue?
Record revenue expense without the exchange of cash
45
Revenues are recognized when they are...
Earned
46
Expenses are recognized in the...
Same period as the related revenue
47
Important to give user info that can make a difference in decision making but not TOO much info
Full disclosure principle
48
Conservatism principle
Lease likely to overstate assets and understate liabilities
49
What are the IFRS framework assumptions? (2)
1 Accrual basis accounting 2 Going concern
50
Elements (framework) of a financial Statement (mnemonic)
REGL ALE needs ID
51
Comprehensive income=
Net income + OCI
52
What are the Fundamental Qualitative Characteristics?
Relevance and Faithful Representation
53
Financial info is relevant if it's...
Capable of making a difference in the decisions made by users
54
Relevance mnemonic
Passing confirms money
55
Predictive value definition
Can be used by users to predict future outcomes
56
Confirming value
Provided feedback about evaluations previously made by users
57
Materiality
Info is material if an omission or misstatement can affect the decisions made by users
58
Faithful Representation (mnemonic)
Completely Neutral is Free from Error
59
Completeness
Financial info includes all necessary info for the user to understand the reported economic results
60
Who issues U.S. GAAP?
FASB
61
Who issues IFRS?
IASB
62
FASB created a conceptual framework that serves as a...
Basis for all FASB pronouncements
63
When the FASB and IASB joint project is complete they will share….
A single conceptual framework for financial reporting
64
What is the objective of general purpose financial reporting?
Disclose the entity's performance
65
Increases in equity from peripheral transactions and other events except expenses and distribution to owners
Losses
66
Probable future economic benefits to be received by a company as a result of past transactions or events
Assets
67
________ may be used to show reductions to or increases in an asset that reflect adjustments beyond the historical cost or carrying amount of an asset
Valuation accounts
68
Equity (of net assets)
Residual interest in the assets after subtracting liabilities
69
IFRS vs. GAAP framework for the preparation of financial statements difference
"IFRS includes: - Assets/Liabilities - Revenue/expenses - Gains/losses - Capital maintenance adjustments"
70
What are capital maintenance adjustments?
Increases and decreases in equity from the revaluation or restatement of assets and liabilities
71
5 elements of present value measurement
``` "1 Estimated future cash flows 2 Expectations abt timing variations of future cash flows 3 Time value of money 4 The price for bearing uncertainty 5 Other factors" ```
72
What 2 approaches are allowed to be used to determine the present value?
Traditional approach and expected cash flow approach
73
Traditional approach of present value computations
Used when assets or liabilities have fixed cash flows that are not expected to vary
74
Elements of present value measurement identified by the mnemonic
UVOTE
75
UVOTE
"U The Price for Bearing Uncertainty. V Expectations about Timing Variations of Future Cash Flows. O Other Factors (e.g. Liquidity Issues and Market Imperfections). T Time Value of Money (the Risk-free Rate of Interest). E Estimate of Future Cash Flow."
76
Which characteristic enhances information that is BOTH relevant and faithfully represented?
Timeliness
77
Replacement cost is defined as the...
amount of cash or its equivalent that would be paid to acquire or replace an asset currently.
78
Replacement cost is an...
acquisition cost.
79
Who are the primary users of financial reports?
External users
80
The qualitative characteristics of useful financial info are likely to help users?
Make decisions about the entity based on financial information

FAR (19 decks)

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