F-1 CONCEPTUAL FRAMEWORKS Flashcards
Q:Name the single source of authoritative nongovernmental U.S. GAAP.
FAR 1-1
The FASB “Accounting Standards Codification” (ASC).
Q: The term “International Financial Reporting Standards” includes what standards?
FAR 1-2
- International Accounting Standards (IAS).
- International Financial Reporting Standards (IFRS).
- IFRIC Interpretations.
- SIC Interpretations.
Q: Who are the primary users of general purpose financial reports?
FAR 1-3
Existing and potential:
- Investors
- Lenders
- Other creditors
Q: Name the pervasive constraint on the information provided in financial reporting.
FAR 1-4
- Cost Constraint:*
- The benefits of reporting financial information must be greater than the costs of obtaining and presenting the information.
Q: Name the fundamental qualitative characteristics of useful financial information.
FAR 1-5
Relevance and Faithful Representation.
Q: Name the three elements of *relevance. *
- Predictive value
- Confirming value
- Materiality
Q: Name the three elements of *faithful representation. *
FAR 1-7
- Neutrality
- Completeness
- Freedom from error
Q: Name the enhancing qualitative characteristics of financial information.
FAR 1-8
- Comparability, Verifiability, Timeliness, and Understandability.
Q: According to SFAC #5, what should a full set of financial statements include?
FAR 1-9
- Statement of Financial Position (the balance sheet)
- Statement of Earnings (the income statement)
- Statement of Comprehensive Income
- Statement of Cash Flows
- Statement of Changes in Owners’ Equity
Q: What is the difference between realization and recognition?
FAR 1-10
- Realization: When sold and converted to cash (or claims to cash).
- Recognition: When recorded in the financial statements.
Q: List the 10 elements of financial statements according to SFAC #6.
Hint: “CREG” and “LALEID”
FAR 1-11
- Comprehensive Income
- Revenues
- Expenses
-
Gains
and
• Losses
• Assets
• Liabilities
• Equity (of Net Assets)
• Investments by Owners
• Distributions to Owners
Q: List the six elements of financial statements according to the IASB Framework.
FAR 1-12
- Assets
- Liabilities
• Equity
- Income (revenue and gains)
- Expenses (expenses and losses)
- Capital maintenance adjustments
Q: Name the five elements of present value measurement per SFAC #7.
Hint: “EVTUO”
FAR 1-13
- Estimate of future cash flow
- Expectations about timing Variations of future cash flows
- Time value of money (the risk-free rate of interest)
- The price for bearing Uncertainty
- Other factors (e.g., liquidity issues and market imperfections)
Q: Describe the expected cash flow approach for present value computations.
FAR 1-14
- Considers a range of possible cash flows and assigns a (subjective) probability to each cash flow in the range to determine the weighted-average, or “expected”, future cash flow.