EXAM 1 Flashcards
ACCOUNTING
the action of counting biz needed to make economic decisions
Management accounting
needed for people in the buisness. if asked, the accounting is in the companies unstandardized format
Financial accounting
needed by people outside the buissness like investors or loan peeps. going to follow nationl standards
Generally accepted accounting principles (GAAP) –
accounting standards for external users
SEC
a federal agency, resulting after the great depression, that enforces, rejects, or encourages standards set by FASB and AICPA for publicly traded companies .
Financial Accounting Standards Board (FASB)
the private sector responsible for setting US (Accounting Standards Updates (to the Accounting Standards Codification)
FASB came to be after which predecessors
Committee on Accounting Procedure (CAP) – 1939 to 1959, Accounting Principles Board (APB) – 1959 to 1973
Emerging Issues Task Force (EITF)
a task force designed to solve accounting problems fast and is considered law… sort of until FASB approves them and makes it a national standards.
The referencing structure under the FASB Codification is as follows:
FASB ASC XXX-YY-ZZ-PP
XXX
Topic
YY
Subtopic
ZZ
Section
PP
Paragraph
Sarbanes-Oxley Act
an act passed, intended to bring credibility back to corporate accounting, making CEOs approve the company’s financial reports. requires financial investigators to be independent from the company.
rules-based and principles based accounting standards
A. Rules-based standards provide detailed guidance on how the standards should be applied. like a recipe
B. Principles-based standards tend to leave the detailed application of the standards in individual circumstances up to the professional judgment of the accountant. they want a certain result, but give you the freedom on how to get to that standard
