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MACC - Accounting Research > EXAM 1 > Flashcards

EXAM 1 Flashcards

1
Q

CH 1 - The FASB Codification

A
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2
Q

A. Background on the FASB Codification

A
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3
Q

The FASB Accounting Standards Codification
(“ASC” or the “Codification”) is considered
the 1) pr___y source of authoritative GAAP
for 3) n__n__ entities.

Guidance from the 4) ___ is also authoritative for 5) public co___

A

1) primary
2) GAAP
3) nongovernmental entities
4) SEC
5) companies

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4
Q

The Codification became effective in 1) ___, with the objective of simplifying
research

A

1) 2009

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5
Q

The Codification 1) r___ that risk by organizing accounting guidance by 2) t___, within a 3) s__ research source

A

1) reduces
2) topic
3) single

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6
Q

What does it mean for the Codification’s guidance to be
authoritative ?

It means that the Codification 1) e____s G____. In order to receive an 2) un___. (aka, un___) a___opinion, U.S. 3) no____ l entities must prepare their 4) f____statements in accordance with Codification guidance.

A

1) establishes GAAP
2) unmodified (aka, unqualified) audit
3) nongovernmental
4) financial

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7
Q

What are the 2 sources that FASB get its authority to set GAAP?

1) S___
2) A___

A

1) SEC
2) AICPA

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8
Q

What are the 2 sources that FASB get its authority to set GAAP?

  1. SEC - acting in its authority under the 1) Sec___ Ex___. Act and Sar___- O____, has identified the FASB as the designated 2) pr___ sector 3) st__d se___ with authority
    to establish GAAP.
  2. AICPA - in its Code of Professional Conduct, recognizes the FASB as the organization with the authority to establish GAAP for 4) no____ entities.
A

1) Securities Exchange Act and Sarbanes-
Oxley
2) private
3) standard setter
4) nongovernmental

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9
Q

Nongovernmental entities include 1) p___ companies, 2) n___ic (pr___) entities , and 3) n__-for-p___t entities.

However, these entities are 4) __t always treated as 5) e____within the Codification.

Nonpublic entities are 6) e___ from some requirements (such as segment 7) re___g re____s) and are frequently given longer 8) tra____ pe___ for adopting new 9) gu___

A

1) public
2) nonpublic (private)
3) not-for-profit
4) not
5) equals
6) exempt
7) reporting requirements
8) transition periods
9) guidance

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10
Q

Accounting guidance for selected 1) indu__, including 2) ___-for-p____ entities, also falls within the Codification’s authority

A

1) industries
2) not-for-profit

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11
Q

What Sources of Guidance Were Used to Populate the Codification?

  1. Am___n In___e of Cer___ Public Acc___ s (A___)
  2. Fi___ Ac___ Sta___ B___(F__)
A
  1. American Institute of Certified Public Accountants (AICPA)
  2. Financial Accounting Standards Board (FASB)
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12
Q

What year was SEC created?

A

1934

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13
Q

American Institute of Certified Public Accountants (AICPA)

A
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14
Q

American Institute of Certified Public Accountants (AICPA)

-the pri___e sector or___tion of prof___nal acc___s

A

-the private sector organization of professional accountants

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15
Q

American Institute of Certified Public Accountants (AICPA) appointed the Com___ on Acc___ng Pro___re (C__) from 1___-1___

A

Committee on Accounting Procedure (CAP) from 1939-1959

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16
Q

American Institute of Certified Public Accountants (AICPA)

Committee on Accounting Procedure (CAP) issued 1) Acc___g Re___ Bul___ (a total of 2) __ ARBs were issued)

A

1) Accounting Research Bulletins
2) 51

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17
Q

American Institute of Certified Public Accountants (AICPA) appointed the A___g Pr___es Bo___d (A__) from 1___-1__

A

American Institute of Certified Public Accountants (AICPA) appointed the Accounting Principles Board (APB) from 1959-1973

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18
Q

American Institute of Certified Public Accountants (AICPA)

Accounting Principles Board (APB) issued 1) A___ Opi___ (a total of 2) __ APB Opinions were issued)

A

1) APB Opinions
2) 31

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19
Q

American Institute of Certified Public Accountants (AICPA)

American Institute of Certified Public Accountants (AICPA) issued AI___A Sta___nts of Po____

A

AICPA Statements of Position

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20
Q

American Institute of Certified Public Accountants (AICPA)

American Institute of Certified Public Accountants (AICPA) also issued 1) Pra___e Bul__ns, Tec__al Inq___es, and A__it & Ac__ting Gu___es

A

1) Practice Bulletins, Technical Inquiries, and Audit & Accounting Guides

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21
Q

What year was Financial Accounting Standards Board (FASB) created ?

A

2009 - Present

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22
Q

Financial Accounting Standards Board (FASB)

The cu___nt sta__d se___ng org___n in accounting

A

The current standard setting organization in accounting

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23
Q

Financial Accounting Standards Board (FASB)

1) ___ full time members, appointed for 2) __ yr terms

A

1) 7
2) 5

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24
Q

Financial Accounting Standards Board (FASB)

1) Ind____t from 2) o___er accounting 3) org___ons and the 4) S__

A

1) Independent
2) other
3) organizations
4) SEC

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25
Q

Financial Accounting Standards Board (FASB)

In the past, the FASB has issued several main documents

a. St___nt of Fi___al St___ds (S__S’s)

b. F__B Int___ns

c. F__B Te__al Bul__ins

d. F___B St__f Pos__ns

e. F__B St___f I____ion G___es

f. Em___ng Is___e T__k Fo___e (EI__) St___nt

A

a. Statement of Financial Standards (SFAS’s)

b. FASB Interpretations

c. FASB Technical Bulletins

d. FASB Staff Positions

e. FASB Staff Implementation Guides

f. Emerging Issue Task Force (EITF) Statements

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26
Q

Financial Accounting Standards Board (FASB)

a. Statement of Financial Accounting Standards (SFAS’s)

the m___n sta___d issued by the FASB

A

the main standard issued by the FASB

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27
Q

Financial Accounting Standards Board (FASB)

b. FASB Interpretations

represent mo___s/clari___ns of ex___g st___ds

A

modifications/clarifications of existing standards

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28
Q

Financial Accounting Standards Board (FASB)

c. FASB Technical Bulletins

stat___ts of fi__ial accounting co__s (S__C)

is this included in the Codification?

A

statements of financial accounting concepts (SFAC)

it’s not part of Codification

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29
Q

Financial Accounting Standards Board (FASB)

d. FASB Staff Positions

provide int___e g___e on im__on of sta__ds

A

provide interpretive guidance on implementation of standards

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30
Q

Financial Accounting Standards Board (FASB)

e. FASB Staff Implementation Guides

practical gu___e on imple___on of sta___ds

A

practical guidance on implementation of standards

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31
Q

Financial Accounting Standards Board (FASB)

f. Emerging Issue Task Force (EITF) Statements

statements on how to account for 1) ne__ and un___l financial transactions 2) be___e these is___s are 3) ad___d by the FASB

A

1) new and unusual
2) before these
3) addressed

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32
Q

Additionally, the Codification includes certain content issued by the Securities and Exchange Commission (SEC) which is authoritative for public companies:

Portions of the following SEC guidance have been included within the Codification:

a. Reg____on __-__
b. Fi___al R___ng Re___ses (__s)
c. Acc__g S___s Rel___es (A__s)
d. Inter___e Re__es (__s)
e. SEC Staff guidance that’s contained in
1. St__f A___ng B___ins (__s)
2. E__F Topic __ and SEC St__f Obs__er co___ents

A

a. Regulation S-X
b. Financial Reporting Releases (FRRs)
c. Accounting Series Releases (ASRs)
d. Interpretive Releases (IRs)
e. SEC Staff guidance that’s contained in
1. Staff Accounting Bulletins (SABs)
2. EITF Topic D and SEC Staff Observer comments

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33
Q

What are the 5 advantages of the Codification?

-simplify 1) u___ access to all 2) aut___ literature

-3) eli___ no__l and du____ material

-simplifies 4) re___ on 5) sp___ topics

-creates a 6) sin__ le___l of authoritative GAAP

A

1) user
2) authoritative
3) eliminates nonessential and duplicate
4) research
5) specific
6) single level

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34
Q

Who’s responsible for maintaining the Codification?

A

FASB

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35
Q

B. Navigating the Codification

A
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36
Q

The Codification is organized into (6 things)

-a___, t____, su____, s___, su___, and p____

A

-areas, topics, subtopics, sections, subsections, and paragraphs

ATSSSP

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37
Q

Formal references to the Codification are generally presented using the following format:

T___ (____) - S___ (__ __) - Se___(__ __) - Pa__ (__)

A

Topic (XXX) - Subtopic (YY) - Section (ZZ) - Paragraph (PP)

The first number (or first X) in topic, is the area
-Ex. 310, the 3 is assets

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38
Q

What are the 9 broad areas of Codification?

  1. G____ P___
  2. P___
  3. ___ts
  4. ____ties
  5. E___
  6. ___ue
  7. E____s
  8. I____
  9. ___ Transactions

-also remember the specific number for each

A
  1. General Principles
  2. Presentation
  3. Assets
  4. Liabilities
  5. Equity
  6. Revenue
  7. Expenses
  8. Industry
  9. Broad Transactions
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39
Q
  1. General Principles

area includes information on 1) br__ co__l matters.

Example topic: 2) G___P

A

1) broad conceptual
2) Generally Accepted Accounting Principles (GAAP)

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40
Q
  1. Presentation

area includes topics related to how 1) inf__ is “p___” on the 2) f____ statements.

Example topics: 3) B___ S___t, I___ Statement, and Statement of _____

A

1) information is “presented”
2) financial
3) Balance Sheet, Income Statement, and Statement of Cash Flows

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41
Q
  1. Assets

area includes topics related to selected 1) cu____ and l___ -t___ as___t categories

EX topics: 2) in___ and rec____s

A

1) current and long-term asset
2) inventory and receivables

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42
Q
  1. Liabilities

area includes topics related to various 1) cu__t and ___-term li___

EX topics: 2) def___re__e and d___t

A

1) current and long-term liabilities
2) deferred revenue and debt

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43
Q
  1. Equity

area includes related to various 1) ____ accounts

EX topics: 2) t___ ___k and d___

A

1) equity
2) treasury stock and dividends

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44
Q
  1. Revenue

area includes topics relating to 1) r___ and other i___ re___n.

Example topics: 2) Revenue from C___s with C___s, and Other ____

A

1) revenue and other income recognition
2) Revenue from Contracts with Customers, and Other Income

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45
Q
  1. Expenses

area includes topics related to various expenses categories

A
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46
Q
  1. Industry

area includes topics where the accounting is 1) u__ for an 2) in___ or t___
of activity.

Example topics: 3) Ai___s, So___, and R__ ____ate

A

1) unique
2) industry or type
3) Airlines, Software, and Real Estate

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47
Q
  1. Broad Transactions

area includes topics relating to 1) sp___ tra_____s, or t__s
involving 2) m___ financial statement accounts.

Example topics: 3) Business Co___, F___ Measurement, and De___

A

1) specific transactions, or topics
2) multiple
3) Business Combinations, Fair Value Measurement, and Derivatives

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48
Q

The “Other Sources” field includes links to

-Accounting Sta___s U___es
-Pre-Codi___on St__ds
-Co___t Statements

A

-Accounting Standards Updates
-Pre-Codification Standards
-Concept Statements

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49
Q

Each topic is broken down into one or several ____

A

subtopics

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50
Q

Each topic contains an 1) “O____” subtopic (“#___”), which you should always make a point of reviewing in addition to more specific subtopics

A

1) “Overall” subtopic (“10”)

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51
Q

Sections

Status (__)
-what section number is it?

Provides ref___ and li__s to A__ng St__ds U__es that have c__ed the co__nt of the su___ic.

A

Status (00)

Provides references and links to Accounting Standards Updates that have changed the content of the subtopic.

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52
Q

Sections

Overview and Background (___)
-what section number is it?

Provides ge___ ov___w and ba____nd inf___on for su___ics.

Describes in general t___s what tra___ons the su___pic is int__ed to ad___s.

A

Overview and Background (05)

Provides general overview and background information for subtopics.

Describes in general terms what transactions the subtopic is intended
to address.

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53
Q

Sections
Objectives (__)
-what section number is it?

States the h__-l___l ob___ of the su___

A

Objectives (10)

States the high-level objectives of the subtopic.

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54
Q

Sections

Scope (___)
-what section number is it?

indicates which 1) trans___s/en___s are subject to the 2) gui___e within the topic.

It’s commonly presented in one or 2 ways
-the guidance may list 3) tran___s that 4) a___n’t within scope
-alternatively, some scope guidance contains 5) t__ts to det____e what transactions should be 6) in___d within the scope of the topic

A

Scope (15)

1) transactions/entities
2) guidance
3) transactions
4) aren’t
5) tests to determine
6) included

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55
Q

Sections

Glossary (___)
-what section number is it?

Defines all g___y t___s used in a subtopic. The Codification also includes a M___r Glo__y, which includes a__ glo___y t__s used within the Codification.

A

Glossary (20)

Defines all glossary terms used in a subtopic. The Codification also includes a Master Glossary, which includes all glossary terms used within the Codification.

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56
Q

Sections

Recognition (___)
-what section number is it?

describes 1) ___t, __n, and ___ an item should be 2) re___ in the financial statements

the 1) ___t, __n, are re___
the h__ is me

A

Recognition (25)

1) what, when, and how
2) recorded

the 1) what, when, are recognition
the how is measurement

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57
Q

Sections

Initial Measurement (__)
-what section number is it?

Describes at what 1) ___e (i.e., h_ ___h?) a financial statement item
should be 2) i___y recorded. Also known as 3) “d__ __” measurement.

A

Initial Measurement (30)

1) value (i.e., how much?)
2) initially
3) “day 1”

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58
Q

Sections

Subsequent Measurement (___)
-what section number is it?

Provides guidance on how to 1) c___ the value of an item 2) a___ it is 3) in___ recorded. Also known as 4) “d__ __” measurement.

A

Subsequent Measurement (35)

1) change
2) after
3) initially
4) “day 2”

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59
Q

Sections

Derecognition (__)
-what section number is it?

Describes ___n and h__ a re___d item should be re___d from the ___al statements.

A

Derecognition (40)

Describes when and how a recorded item should be removed from the financial statements.

60
Q

Sections

Other Presentation Matters (__)

Provides ad___ gu___ce on h__w the transaction should be p__ted in the fin___al sta__nts.

-what section number is it?

A

Other Presentation Matters (45)

Provides additional guidance on how the transaction should be presented in the financial statements.

61
Q

Sections

Disclosures (___)
-what section number is it?

Provides dis___ requ____ for a pa___lar tran___ion or fina___l st___nt item.

A

Disclosures (50)

Provides disclosure requirements for a particular transaction or
financial statement item.

62
Q

Sections
Implementation Guidance and Illustrations (___)
-what section number is it?

Includes
(1) int___ gui___ describing how the guidance should be applied to spe__\ scen___
(2) il___ examples.

A

Implementation Guidance and Illustrations (55)

(1) interpretive guidance describing how the guidance should be applied to specific scenarios
(2) illustrative examples.

63
Q

Sections
SEC Sections (___)
-what section number is it?

SEC sections are identified in the Codfication by an 1) “__” that precedes the section reference number.

These sections include accounting and reporting guidance that’s authoritative for 2) ___c companies.

Any content not fitting nearly within the separate sections is available under S-99.

A

SEC Sections (S-xx)

1) “S”
2) public

64
Q

What are the most common section numbers?

A

-Recognition (25)
-Initial Measurement (30)
-Subsequent Measurement (35)

65
Q

What are the 2 types of measurement ?

-I____Measurement (____)
-S___t Measurement (__)

A

-Initial Measurement (30)
-Subsequent Measurement (35)

66
Q

Paragraphs are where the 1) ac___ gu___ce is found within the Codification

A

Actual guidance

67
Q

Paragraphs are sometimes organized into groups called ______

A

subsections

68
Q

In addition to understanding what subsection you are in within the guidance, you must also
pay attention to 1) pa___ g__s indicated by a 2) h___ and · · > no___.

For example, para-graphs could be organized as follows:
Issue header
>Issue 1
· >Subissue A
· >Subissue B
>Issue 2

A

1) paragraph groups
2) header and · · > notations.

69
Q

C. Other Search Methods

A
70
Q

Other Search Methods

In addition to Browse searches, several other methods are available for searching the codification

  1. Search by 1) ke__using the 2) B__ Search or 3) A__ Search feature.
  2. Jump directly to guidance using the
    4) ___C ref__nu__r (e.g., type in ASC 820-10-30-1to jump directly to fair value measurement guidance).
  3. Search using the 5) M__ G__y, finding a keyword of 6) in___ and following 7) l___s to T__ where the term is used.
  4. Use the 8) S___ S__ feature to identify original sources of Codification guidance.
A

1) keyword
2) Basic Search
3) Advanced
4) ASC reference number
5) Master Glossary
6) interest
7) links to Topics
8) Show Sources

71
Q

Search by Keywords

a 1) ke___d s__ch (ie. t__t search) is most useful when you are looking for a 2) sp___ic term in the guidance or when you are 3) unc___n where you would begin a 4) br___e se___ch

A

1) keyword search (ie. text search)
2) specific term in the guidance
3) uncertain
4) browse search

72
Q

Search by Keywords

When a researcher performs a keyword search, the results of the search are listed by 1) t___ic and include an 2) ex___pt from the guidance containing the item

A

1) topic
2) excerpt

73
Q

Search by Keywords

As this type of search allows researchers to see a term in 1) m___le co___ts, keyword searches can be useful 2) br___ng tool.

Researchers can choose to pursue 3) o__e or se__al search results can be used to generate 4) id__s for other search items that might be effective.

A

1) multiple contexts
2) brainstorming
3) one or several
4) ideas

74
Q

Search by Keywords

After a keyword search, researchers can 1)”na__w” instances of the term:

(a) by using a re___d t__m
(b) to a si___e or m___e ar__a(s)

A

1)”narrow”

(a) by using a related term
(b) to a single or multiple area(s)

75
Q

Search by Keywords
Some keyword search rules:

a. Mu___e te__ms: entering troubled debt is equivalent to searching for tro___d and d__t

b. Ph___s: to search for an e__ct ph___e, use q___es.
EX. entering “involuntary conversion” will return results showing these two words together.

Without qu___s, results will include any guidance that includes both the words “involuntary” and “conversion”.

c. Sin___r/Pl___al: a search for either in___le(s) will yield the s___e res__ts

A

a. Multiple terms: entering troubled debt is equivalent to searching for troubled and debt

b. Phrases: to search for an exact phrase, use quotes.
Without quotes, results will include any guidance that includes both the words “involuntary” and “conversion”.

c. Singular/Plural: a search for either intangible(s) will yield the same results

76
Q

Search by ASC Reference Number

Researchers can use the 1) “G__ T__” feature to jump directly to 2) spe___c con___t, by typing in the context’s 3) A__ r___ce n__ber.

This feature can be useful to a researcher who wants to verify a particular reference in the guidance or for experienced researchers who have certain search paths memorized

A

1) “Go To”
2) specific content
3) ASC reference number

77
Q

Search by Cross Reference Tab

The Codification also includes a Cross-Reference Feature (in the Tools menu located under the Master Glossary link at left).

This feature allows researchers to match Codification topics with the original standards that were used to populate the Codification.

You can either key in a Codification topic to find the original standard number or can key in the number of an original standard and be directed to the corresponding Codification topic.

A
78
Q

Search by Master Glossary

The Master Glossary is another useful starting point for researchers seeking further information about a specific term.

Click on any term in the Master Glossary and you will be directed to where that term is used within the Codification

A
79
Q

CH 2 - The Research Process

A
80
Q

The Accounting Research Process

a 1) s__p by s__p process that researchers can apply to a wide range of 2) b___s and ac___ing is__es

A

1) step by step process
2) business and accounting issues

81
Q

The Accounting Research Process

This process involves
-fully un___ing a tra____n
-identifying the is____s
-th__ng through these is___s
-lo___n applicable res___ch
-considering al____es
-reaching a th____ful and de___ble con__n

A

-fully understanding a transaction
-identifying the issues
-thinking through these issues
-location applicable research
-considering alternatives
-reaching a thoughtful and defensible conclusion

82
Q

The Accounting Research Process

1) M__e vari___ns of this process exist
EX. in other textbooks, in accounting firm literature, etc.
-this book describes one of many possible approaches

A

1) Multiple variations

83
Q

A. Steps in the Research Process

A
84
Q

Steps in the Research Process
What are the steps?

Pre-Step: Understand the b___s and in___try

Step 1: Understand the fa___s/ba___nd of the tran___on

Step 2: Define the pr___m: that is, identify the “re___le q___on”

Step 3: St__p and Th___k: What accounting tr___nt will likely be ap___ate?

Step 4: Search potentially rel__nt so___es of guidance

Step 5: Analyze the rel___e of all po___al G___P sources

Step 6: Ju___y and doc___nt your con___ion

A

Pre-Step: Understand the business and industry

Step 1: Understand the facts/background of the transaction

Step 2: Define the problem: that is, identify the “researchable question”

Step 3: Stop and Think: What accounting treatment will likely be appropriate?

Step 4: Search potentially relevant sources of guidance

Step 5: Analyze the relevance of all potential GAAP sources

Step 6: Justify and document your conclusion

85
Q

Steps in the Research Process
Pre-Step: Understand the business and industry

-before you start the research on a specific transaction, first get to know the company’s 1) bus___s

-you first need to 2) und___d the bu__ss be__e you can 3) und___d the tr__tion

EX. what are the primary business activities, primary sources of revenue, key accounting practices in this

A

1) business
2) understand the business before
3) understand the transaction

86
Q

Steps in the Research Process
Step 1: Understand the facts/background of the transaction

-the first challenge is to fu___ un___nd the tra___ion

-start with reading transaction the do___ts and talking to pa___s w___in the org___n who have kno___ge of the transaction

A

-the first challenge is to fully understand the transaction

-start with reading transaction the documents and talking to parties within the organization who have knowledge of the transaction

87
Q

Steps in the Research Process
Step 1: Understand the facts/background of the transaction

Consider whether the following questions would shed additional light on the transaction:
-has my company undertaken any transaction si__r to this in the p___t?

-have p__rs in my industry completed s___ar transactions?

-should spe____s be involved? (technical specialists, actuaries, valuation specialists, legal counsel, etc.)

A

-has my company undertaken any transaction similar to this in the past?

-have peers in my industry completed similar transactions?

-should specialists be involved? (technical specialists, actuaries, valuation specialists, legal counsel, etc.)

88
Q

Steps in the Research Process
Step 2: Define the problem: that is, identify the “researchable question”

-the next step of your research process is to define the pr___, that is identify the res___le que___n(s)

-avoid l____g or c___lex qu__ns: if your question has mu___e parts, b___k the issue into t__o or more que___s

A

-the next step of your research process is to define the problem, that is identify the researchable question(s)

-avoid long or complex questions: if your question has multiple parts, break the issue into two or more questions

89
Q

Steps in the Research Process
Step 3: Stop and Think: What accounting treatment will likely be appropriate?

-before you turn to the Codification for guidance, 1) s___p and th__k on your own: What accounting 2) tre____t do you think would be most 3) a_____te for this transaction or event?

-this will help you stay 4) o___ve

-identify 5) ar___s, to___s, and sub___s that you think may be relevant for a starting point when 6) “bro___g” the Codification. Identify any search terms that may be relevant for “word searching” in the Codification

A

1) stop and think
2) treatment
3) appropriate
4) objective
5) areas, topics, and subtopics
6) “browsing”

90
Q

Steps in the Research Process
Step 4: Search potentially relevant sources of guidance

-start your research by 1) loc__g the Codification 2) t__ic that you expect to be most 3) re___nt

-be sure to check 4) al__ su___s within that topic you expect to be most 5) rel__

A

1) locating
2) topic
3) relevant
4) all subtopics
5) relevant

91
Q

Steps in the Research Process
Step 4: Search potentially relevant sources of guidance

-follow all 1) le__s (such to other topics) that appear to be 2) r__ant. Sometimes, a single accounting issue can involve consideration of 3) m__le Co___on topics

-Finally, 4) re___w the guidance you’ve 5) coll___ed and weed out sources that appear to be 6) l__s re__nt

A

1) leads
2) relevant
3) multiple Codification topics
4) review
5) collected
6) less relevant

92
Q

Steps in the Research Process
Step 5: Analyze the relevance of all potential GAAP sources

-1) ana__e the 2) gu__ce: evaluate how the guidance applies to your 3) spe___c res___h qu__ns

-the Codification may allow 4) alt___ive ac___ng trea__ts. In such circumstances, clearly 5) ide___fy and ana___e the relative merits of the alternative treatments available, based on the facts of your transaction

-make sure you 6) un___nd the meaning of all 7) rel__t w_ds and ph__es

A

1) analyze
2) guidance
3) specific research questions
4) alternative accounting treatments
5) identify and analyze
6) understand
7) relevant words and phrases

93
Q

Steps in the Research Process
Step 6: Justify and document your conclusion

-the final step of the research process is to reach a 1) con___n: that is determine which accounting treatment is 2) m___t ap__ate given the 3) au___e gui___ce and given your fact situation

-clearly 4) do___nt this conclusion

A

1) conclusion
2) most appropriate
3) authoritative guidance
4) document

94
Q

B. Judgment and Decision Making

A
95
Q

Judgment and Decision Making

-in each step of the research process, your 1) jud___nt may be prone to certain 2) bi__es

-these biases are part of 3) hu__n na___e

-these biases are often called 4) “de___on tr__s” and can affect your 5) re__rch co__ons

A

1) judgment
2) biases
3) human nature
4) “decision traps”
5) research conclusions

96
Q

Common Biases that can impact your professional judgment:

a. Confirmation Bias

our inclination to 1) se__k (or weight 2) m__e he__ly) information supporting our existing 3) vie___nt, and to 4) do__lay (or mi__ize) information supporting 5) diff___nt op__ons

A

1) seek
2) more heavily
3) viewpoint
4) downplay (or minimize)
5) different options

97
Q

Common Biases that can impact your professional judgment:

b. Availability Bias

the tendency to weight 1) m___e he__y that information which is readily 2) ava___le (or me___y ac___ble) and to 3) ove__k information which takes more 4) t__e or ef__rt to gat__

A

1) more heavily t
2) available (or mentally accessible)
3) overlook information
4) time or effort to gather

98
Q

Common Biases that can impact your professional judgment:

c. Recency Bias

tending to give more 1) we__t to inf__n that you received most 2) rece___

A

1) weight to information
2) recently

99
Q

Common Biases that can impact your professional judgment:

d. Anchoring and Adjustment bias

The tendacy to 1) fi___e on ini__al info__ion received and 2) fai___g to adu__st adequately for 3) subs__nt inf___on.

Such as fixating on a number we observe early on, then later comparing this to every number we consider

A

1) fixate on initial information
2) failing to adjust
3) subsequent information.

100
Q

Common Biases that can impact your professional judgment:

e. Group Think

prioritizing the views of the most 1) vo__l, most 2) res___d, or most 3) sen__r, m__er of a group; agreeing 4) t__o r__ily to a con___ion in the interest of group 5) har__

A

1) vocal
2) respected
3) senior, member of a group
4) too readily to a conclusion
5) harmony

101
Q

Common Biases that can impact your professional judgment:

f. Hindsight bias

the tendency of people to 1) ove___te their ability to have 2) pre___d an outc___e that could 3) n__t pos___ly have been 4) pre__ed.

In essence, the hindsight bias is sort of like saying 5) “I kn___ __t!” when an 6) ou___e (either ex__d or une___ed) oc___rs

A

1) overestimate
2) predicted an outcome
3) not possibly
4) predicted
5) “I knew it!”
6) outcome (either expected or unexpected) occurs

102
Q

Common Biases that can impact your professional judgment:

g. Escalation of commitment

staying with a 1) de___n even when you 2) sus__t or have 3) ev___e that the decision is 4) wr__g

this could include trying to make GAAP 5) “f__” your facts once you have reached a 6) pr__ary conclusion

A

1) decision
2) suspect
3) evidence
4) wrong
5) “fit”
6) preliminary

103
Q

Approaches to overcome potential biases:

-be aw__e that such bi__s e__st

-obtain info___n and vie___nts from a variety of so___s

-seek info__n that will cha___e your exi___g vi___ws or which offers a different perspective

A

-be aware that such biases exist

-obtain information and viewpoints from a variety of sources

-seek information that will challenge your existing views or which offers a different perspective

104
Q

Approaches to overcome potential biases:

-lis___n and un___d when someone disa__es with you

-apply a sy__atic res__ch process

-be obj__ve

A

-listen and understand when someone disagrees with you

-apply a systematic research process

-be objective

105
Q

CH 3 - Creating Effective Documentation

A
106
Q

The objectives of accounting research are generally twofold:

  1. To ac___t for tra____ns or it___s in a manner that is ap___e and su____le based on auth___e gu__nce
  2. To cr___e do___n describing the re___h perf___d and sup___g the con___n reached
A
  1. To account for transactions or items in a manner that is appropriate and supportable based on authoritative guidance
  2. To create documentation describing the research performed and supporting the conclusion reached
107
Q

2 main forms of communication accounting research

-e__l co____n
-formal ac____g res___h m___o

A

-email communication
-formal accounting research memo

108
Q

Email Communication

-email is often 1) us___l for 2) comm___g the 3) res___s of 3) li___d-s___pe res___ q___ns

-more 4) co__n when you are 5) n__t the main 6) ind__l responsible for 7) do___g the 8) re___h

EX. if you are helping provide relevant guidance on some aspect of an issue that a colleague is managing

A

1) useful
2) communicating
3) results
3) limited-scope research questions
4) common
5) not
6) individual responsible
7) documenting
8) research

109
Q

Email Communication

Here are some important points in developing an email
a. keep it br___

b. include a su___t l___e that bri___ de___s the accounting i___e you’ve r___ed

c. re-st___e the qu___n: “you asked me to res__h…”

d. include an ex___t from au___ve gu___e to su___t your r___e

e. use co__e se___nces

f. if you have li___ f___ts on an is___e and have to make any as____s, st___e your as___ns

g. re___d the email be__e you send it

h. do __t say “___ think/I f__l’, this isn’t about y__u. It’s about the gu___.

i. keep your t___e as pr___al as p___ble

j. include an o___r to be of fu__r as__ce

A

a. keep it brief

b. include a subject line that briefly describes the accounting issue you’ve researched

c. re-state the question: “you asked me to research…”

d. include an excerpt from authoritative guidance to support your response

e. use complete sentences

f. if you have limited facts on an issue and have to make any assumptions, state your assumptions

g. reread the email before you send it

h. do not say “I think/I feel’, this isn’t about you. It’s about the guidance.

i. keep your tone as professional as possible

j. include an offer to be of further assistance

110
Q

Accounting Research Memo

1) Doc____n in the form of an accounting issues 2) mem___ (a formal 3) res___h m___o) is generally 4) war____d when a transaction is

5)
-comp___
-ju____al
-hig__y m___l

A

1) Documentation
2) memorandum
3) research memo
4) warranted
5)
-complex
-judgmental
-highly material

111
Q

Common Section Headings

Facts/Background - state the 1) rel___t facts surrounding the 2) is__e (it may be helpful to include a 3) di___m of the transaction)

A

1) relevant facts
2) issue
3) diagram

112
Q

Common Section Headings
Facts/Background

-the 1) ba___d section of an 2) is__s m__o should include all 3) re___t background necessary for 4) u____ng the 5) tra___n and its 6) acc___ng

-this section should be 7) co___e but not 8) s___se

A

1) background
2) issues memo
3) relevant
4) understanding
5) transaction
6) accounting
7) concise
8) sparse

113
Q

Common Section Headings
Facts/Background

-provide enough 1) de___l about the 2) is___e that a party 3) uni___d with the matter could 4) pi__ u__ the memo and 5) un___d the 6) is___e well enough to form an 7) opi___n as to whether or not the accounting treatment is 8) app___e

  • a 9) di___m of the transaction may 10) e___ce a reader’s 11) un___ of the 12) r___ips and parties involved in the 13) is__e
A

1) detail
2) issue
3) uninvolved
4) pick up
5) understand
6) issue
7) opinion
8) appropriate
9) diagram
10) enhance
11) understanding
12) relationships and parties
13) issue

114
Q

Common Section Headings

Question/Issue - list the 1) se___ble qu__s you are trying to 2) a___r

A

1) searchable questions
2) answer

115
Q

Common Section Headings
Question/Issue

-this section of the memo should follow 1) im__y after the 2) bac___

-each 3) is___e should be 4) p___d in the form of a 5) qu___

-if there are 6) m___le issues, state 7) e__h issue 8) sepa___

A

1) immediately
2) background
3) issue
4) phrased
5) question
6) multiple
7) each
8) separately

116
Q

Common Section Headings

Analysis/Support - include all 1) rel___t au___ive g___ce, along with an analysis of how the 2) g___ce applies to your particular 3) f___t p___rn

A

1) relevant authoritative guidance
2) guidance
3) fact pattern

117
Q

Common Section Headings
Analysis/Support

-the analysis section is the most 1) cr__l co___nt of a 2) w__l-wr___n iss__s me__o. In this section, you will address each 3) is__e listed, 4) o__e at t___e

-include excerpts from authoritative guidance, along with commentary in your own words about how the guidance applies to your transaction

A

1) critical component
2) well-written issues memo
3) issue listed
4) one at time

118
Q

Common Section Headings
Analysis/Support

-1) rel___e the 2) gui__e to your specific 3) f__t pa__n

-clearly 4) des___e any 5) alte___s available in accounting for a given 6) tra___on, weighing their 7) rel___e me___ts

A

1) relate
2) guidance
3) fact pattern
4) describe
5) alternatives
6) transaction
7) relative merits

119
Q

Common Section Headings
Analysis/Support

-your analysis section should include 1) en__h exc__ts from the 2) aut___ve g___nce that a reader will 3) n__t have to g__ b__k to the Codification in order to 4) und___nd the sup___t for your analysis

A

1) enough excerpts
2) authoritative guidance
3) not have to go back
4) understand the support

120
Q

Common Section Headings
Analysis/Support

-1) org___ze your analysis

-use 2) su___gs as needed to help 3) gu___e your 4) re__r

A

1) organize
2) subheadings
3) guide
4) reader

121
Q

Common Section Headings
Analysis/Support

The Analysis section is also the 1) ap____ place for discussion of other key factors considered in determining an 2) a___e accounting treatment.

For example
-How are p___r companies accounting for this t___e of transaction?

-How has our company han___d this t__e of transaction hist___ly?

-Did anyone co___t with a su___ct-ma___er ex___rt in analyzing this i__ue?

A

1) appropriate
2) appropriate accounting treatment

-How are peer companies accounting for this type of transaction?

-How has our company handled this type of transaction historically?

-Did anyone consult with a subject-matter expert in analyzing this issue?

122
Q

Common Section Headings
Conclusion

Conclusion - state your 1) con___ion based on the research 2) fin__gs and 3) hi___ht any 4) k__y fac___rs considered. Provide 5) ad___al discu___n and su___ort 6) hi__y judg___tal is__es

A

1) conclusion
2) findings
3) highlight
4) key factors
5) additional discussion and support
6) highly judgmental issues

123
Q

Common Section Headings
Conclusion

-complete your 1) discu___n of each 2) se__ate is___e with a 3) cle___y wr__ten con__on

-be sure the stated conclusion 4) an__rs the spec___c res__h qu___ion

A

1) discussion
2) separate issue
3) clearly written conclusion
4) answers the specific research question

124
Q

Common Section Headings
Conclusion

-be sure the conclusion is 0) cl___ and ob_s

-in cases where the choice between 1) t__o or m__e alte__s is 2) hi___ly jud___tal, the conclusion should be 3) lon___r and m__re deta___d.
Be sure to provide 4) sup__rt for why the 5) alt____e selected 6) be__t ref___ts the substance of the transaction.

A

0) clear and obvious
1) two or more alternatives
2) highly judgmental,
3) longer and more detailed
4) support
5) alternative
6) best reflects

125
Q

Common Section Headings
Financial Statement and Disclosure Impacts

Financial Statement and Disclosure Impacts - when applicable, 1) su___ize fin___ial st___nt acc__nts that are 2) af___d and list any 3) disc___res that are 4) req___d. Include 5) jo___al ent__s if helpful

A

1) summarize financial statement accounts
2) affected
3) disclosures
4) required
5) journal entries

126
Q

Common Section Headings
Financial Statement and Disclosure Impacts

-when applicable, conclude your memo with a 1) sum___y of the 2) im___t on the 3) fin___al stat___ts and any required 4) disc___res

-5) jo___al ent___es may be useful in describing anticipated 6) fin___al stat___nt im___s

A

1) summary
2) impact
3) financial statements
4) disclosures
5) journal entries
6) financial statement impacts

127
Q

Other Important Points

A
128
Q

Other Important Points

-your ultimate goal with the memo is to create 1) “o__e-st__p sh__p” for knowledge about this 2) tra___n and its acc___ng.

A reader should 3) n__t have to do additional work to 4) fu___y und___d the 5) bac___nd or the su___ort the accounting 6) con___on

A

1) “one-stop shop”
2) transaction and its accounting
3) not have to do additional work
4) fully understand
5) background or the support
6) conclusion

129
Q

Other Important Points

-Use 1) con___e, cl__r sen____ces, and always r__-re__ your work before submitting

Check for 2) sp___g and pr___er gra___ar

A

1) concise, clear sentences, and always re-read
2) spelling and proper grammar

130
Q

Other Important Points

-use an 1) act___e vo___e

2) Pa__ve voice: the girl was bitten by the dog

3) Ac__e voice: the dog bit the girl

A

1) active voice
2) Passive
3) Active

131
Q

Properly Referencing Accounting Guidance

A
132
Q

Properly Referencing Accounting Guidance

-the first time you refer to the Codification in a memo, give its 1) f__l ti___e (“FASB Accounting Standards Codification”)

Include the 2) nu__al refe___e for the topic you are citing

A

1) full title
2) numerical reference

133
Q

Properly Referencing Accounting Guidance

Strong References:

-According to the ASC 330-10-35-16, “Quote”

-ASC 330-10-35-16 states: “Quote”

-ASC 330-10-35-16 requires: “Quotes”

-Per ASC 330-10-35-16: “Quote”

-ASC 330-10-35-16 provides the following guidance: “Quote”

-The required treatment is based on ASC 330-10-35-16: “Quote”

A
134
Q

Properly Referencing Accounting Guidance

Weak References:

-ASC 330-10-35-16, asks readers to…“Quote”

-ASC 330-10-35-16, believes…“Quote”

-The Codification writes…“Quote” ASC 330-10-35-16

-The FASB says “Quote” ASC 330-10-35-16,

-I found the following guidance…“Quote” ASC 330-10-35-16,

A
135
Q

Properly Referencing Accounting Guidance

-any guidance 1) co___d directly from the Codification must be enclosed in 2) do___le quot__n marks and you must 3) ci___e the source of the guidance down to the paragraph level of 4) de__il

A

1) copied directly
2) double quotation
3) cite the source
4) detail

136
Q

Properly Referencing Accounting Guidance

-there’s one instance in which quotation marks are not required: If you are including a long excerpt, roughly 3 lines or more from the Codification and you 1) in__nt the guidance

A

1) indent

137
Q

Properly Referencing Accounting Guidance

-1) ell___s or those 3 dots in a row (…) are used when the writer 2) o___ts so__e te__t in a quote or 3) do___ q___e the 4) f___l se____e or pa___h.

As you begin writing technical emails and memos, you may find that ellipses are useful in 5) eli____ irre___ from a paragraph may 6) imp__e the rea___ity of your analysis

A

1) ellipses
2) omits some text
3) doesn’t quote
4) full sentence or paragraph
5) eliminating irrelevant
6) improve the readability

138
Q

Properly Referencing Accounting Guidance

make sure that using an ellipsis 1) d__s n__t c__ge the meaning of the 2) or___al gu__ce

A

1) does not change the meaning
2) original guidance

139
Q

Style Tips for Professional Communication

A
140
Q

Style Tips for Professional Communication

Avoid saying 1) “I” or “we” or “you” in accounting research communications.

Technical accounting memos are not about 2) y__: they should not be written in 3) fi__t pe__n

A

1) “I” or “we” or “you”
2) you
3) first person

141
Q

Style Tips for Professional Communication

Avoid saying “I” or “we” or “you” in accounting research communications. Technical accounting memos are not about you: they should not be written in first person

-Do not say: “I found the…”

-Do not say: “I think that…”

A
142
Q

Style Tips for Professional Communication

When referring to a company, do not say 1) “t__y” or “th__r”.

Rather call the company by its 2) fu__ na__e ini___ly, and identify (in parenthesis) any abbreviations you plan to use for the company name thereafter.

A

1) “they” or “their”
2) full name initially

143
Q

Style Tips for Professional Communication

When referring to a company, do not say “they” or “their”. Rather call the company by its full name initially, and identify (in parenthesis) any abbreviations you plan to use for the company name thereafter.

-Do not say: The company has evaluated its accounting

-Do not say: The company has evaluated their accounting

A
144
Q

Style Tips for Professional Communication

Keep your language 1) ne___al (avoid st___ng wo__s). Try to leave your 2) em___s out of technical writing.

EX. Don’t say the company’s accounting treatment is wrong, ridiculous, fabulous, amazing, terrible, etc.

A

1) neutral (avoid strong words)
2) emotions

145
Q

Style Tips for Professional Communication

Instead say that the accounting treatment is:

-Appropriate/not appropriate for this situation

-Consistent/not consistent with the guidance

-Supported/not supported by

A
146
Q

Style Tips for Professional Communication

Try to avoid “absolutes” in your technical writing. It’s better to use qualifying words

-Use the word “generally” rather than “always”

-Use the word “could” rather than “will”

A

MACC - Accounting Research (1 decks)

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