Core Concepts

Question 1

Objective of general-purpose financial reporting

Answer 1

report financial information that is useful in making decisions about providing resources to the reporting entity. Users of financial statements can have direct and indirect interests and can be internal or external users.

Question 2

Direct Interests Users

Answer 2

Investors or potential investors, suppliers and creditors, and employees, and management.

Question 3

Indirect Interests Users

Answer 3

Financial advisers & analysts, stock markets or exchanges, and regulatory authorities.

Question 4

Internal Users

Answer 4

use financial statements to make decisions affecting the operation of business. Ex. management, employees, and board of directors.

Question 5

External Users

Answer 5

Use financial statements to determine whether doing business with the firm will be beneficial. Ex. Investors, creditors, and analysts.

Question 6

U.S. GAAP

Answer 6

Generally accepted accounting principles.

Question 7

Accrual basis of accounting

Answer 7

Records the financial effects of transactions and other events and circumstances when they occur rather than when their associated cash is paid or received. Financial Statements Prepared under the accrual basis of accounting.
Revenues are recognized int eh period in which they were earned
Expenses are recognized in the period in which they were incurred.

Question 8

Financial statements must be prepared

Answer 8

in conformity with U.S. GAAP and under the accrual basis of accounting.

Question 9

Full set of financial statements

Answer 9

Statement of Financial Position “Balance Sheet”
Statement of Comprehensive income “income statement & other comprehensive income statement”
Statement of changes in Equity
Statement of Cash Flows
Notes & Disclosures

Question 10

Statement of Financial Position / Balance Sheet

Answer 10

Assets = Liabilities + Equity

Question 11

Income Statement & Statement of Comprehensive Income

Answer 11

Income (loss) = Revenues + Gains - Expenses - Losses

All items of comprehensive income are recognized for the period in either
1) One continuous financial statement that has two sections, net income and
OCI, or
2) Two separate but consecutive statements.
a) The first statement (the income statement) presents the components of net
income and total net income.
b) The second statement (the statement of OCI) is presented immediately
after the first. It presents a total of OCI with its components and a total of
comprehensive income.

Question 12

Statement of Changes in Equity

Answer 12

reconciliation for the accounting period of the beginning balance for each component of equity to the ending balance.  Each change is disclosed separately in the statement.  
Net income (loss), Cash or property dividends paid, issuance of common stock, repurchase of own stock "treasure stock",

Question 13

Statement of Cash Flows

Answer 13

Cash receipts and Cash Payments of an entity during the period

Question 14

Revenue Recognition Principle

Answer 14

Revenues and gains should be recognized when realized or realizable and earned.

Question 15

IFRS difference Extraordinary Items

Answer 15

No items are classified as extraordinary, either on the statement of comprehensive income or in the notes.

Question 16

IFRS Difference The completed-contract method

Answer 16

The completed-contract method is not used. When the outcome of a long term
construction contract cannot be reliably estimated, revenue recognition
is limited to recoverable costs incurred. Contract costs must be recognized
as an expense in the period in which they are incurred.