CONCEPTUAL FRAMEWORK,STANDARDS,STANDARD SETTING Flashcards
What is the purpose of information presented in notes to the financial statements?
To provide disclosures required by generally accepted accounting principles
The Government Accounting Standards Board (GASB) is the body authorized to promulgate standards of financial accounting and reporting for:
governmental units.
How is the Form 10-Q filed with the SEC?
This form must be filed electronically on EDGAR unless this filing causes hardship on the filing company.
The SEC’s rulemaking procedures identified on their website include which of the following steps?
Rule adoption
During a period when an enterprise is under the direction of a particular management, its financial statements will directly provide information about:
enterprise performance but not directly provide information about management performance.
Consolidated financial statements are typically prepared when one company has a controlling financial interest in another, unless:
such control does not rest with the majority owner because the subsidiary is in bankruptcy.
required as part of the filing of the Form 10-Q
- A list of “material events” that have occurred with the company
- A discussion from the management
- Financial statements
SEC Regulation S-X provides guidance for the issuer regarding:
format and content of financial information submitted to the SEC.
are qualitative characteristics that enhance the usefulness of information that is relevant and faithfully represented.
Comparability, verifiability, timeliness, and understandability
Confirmatory value is a component of
relevance.
At the end of the accounting period, the components of other comprehensive income are transferred to which of the following stockholders’ equity accounts?
Accumulated other comprehensive income
How can forfeited nonvested accounts of an employee benefit plan be used?
forfeited nonvested accounts—specifically, identification of those amounts that are used to reduce future employer contributions, expenses, or reallocated to participant’s accounts, in accordance with plan documents.
reported as a decrease in the statement of changes in net assets available for benefits of an employee benefits plan?
Benefits paid to participants
GASB 1600.103 requires governmental entities to issue which two sets of financial statements?
The statement of net position and the statement of activities
included on a statement of changes in equity
The impact of the transactions on the number of shares of stock, if any, is presented in the descriptions to the left.
Events changing stockholders’ equity accounts are listed chronologically to the left.
Column headings identify individual stockholders’ equity accounts.
FASB ASC 274-10-35-11 states that nonforfeitable rights to receive future sums that have all the following characteristics shall be presented as assets at their discounted amounts:
The rights are for fixed or determinable amounts.
• The rights are not contingent on the holder’s life expectancy or the occurrence of a particular event, such as disability or death.
• The rights do not require future performance of service by the holder.
How should a gain from the sale of used equipment for cash be reported in a statement of cash flows using the indirect method?
In operating activities as a deduction from income
Reporting inventory at the lower of cost or market is a departure from the accounting principle of:
historical cost.
best describes an operating procedure for issuing a new Financial Accounting Standards Board (FASB) Accounting Standards Update?
An update is issued only after a majority vote by the members of the FASB.
entity develops and distributes accounting standards for non-U.S. companies?
IASB
The use of International Financial Reporting Standards is required by:
The International Accounting Standards Board (IASB)
accounting bases may be used to prepare financial statements in conformity with a comprehensive basis of accounting other than generally accepted accounting principles?
I. Basis of accounting used by an entity to file its income tax return
II. Cash receipts and disbursements basis of accounting
the modified cash basis of accounting is
The modified cash basis is a hybrid method that combines features of both the cash basis and the accrual basis.
The resulting balance sheet would include long-term assets, accumulated depreciation, and a liability for income taxes.
Modifications to the cash basis accounting include such items as the capitalization of assets and the accrual of income taxes
The University of Tulsa, a private institution, is required to report under the standards of which of the following bodies?
PrimarilyFASB
entity develops and distributes accounting standards for nongovernmental, nonprofit entities?
FASB
Must be included in a company’s summary of significant accounting policies in the notes to the financial statements?
Revenue recognition policies
On December 31, 20X1, Date Co. awaits judgment on a lawsuit for a competitor’s infringement of Date’s patent. Legal counsel believes it is probable that Date will win the suit and indicated the most likely award together with a range of possible awards. How should the lawsuit be reported in Date’s 20X1 financial statements?
In note disclosure only
If Date Co. wins the lawsuit, the award paid to Date will be a
Gain
an acceptable method to report taxable income?
Cash basis
Accrual basis
The hybrid method
What types of rules are generally issued by the SEC?
The SEC issues Financial Reporting Releases that usually agree with U.S. GAAP.
The entity’s first IFRS financial statements must contain an
explicit and unreserved statement that the financial statements are in compliance with IFRSs.
is the accounting process that recognizes the value of assets or liabilities and related revenues, expenses, gains, and losses, whether received or paid in cash or by credit, barter, or other means
Accural
involves future cash receipts and payments and may involve the use of an estimate as to the value of a transaction
Accural
property or services received are included in gross income when actually or constructively received. Cash or checks received are considered gross income
Under the cash basis—or cash receipts method
The rulemaking process usually begins with a
rule proposal
advances specific objectives and methods for achieving them.
Rule Proposal:
Rulemaking can involve several steps
Concept Release
Rule Proposal
Rule Adoption
Financial statements provide direct information about enterprise performance because the primary focus
of the statements is to provide information about the financial performance of that enterprise by providing information about earnings.
Is cash available for current operations. It is the most liquid asset; accordingly, it is listed first in the current assets section
Unrestricted cash
is all cash not designated or available for use in current operations.
Restricted Cash
