F1

Question 1

Name the single source of authoritative nongovernmental U.S. GAAP.

Answer 1

The FASB “Accounting Standards Codifications” (ASC)

Question 2

The term “International Financial Reporting Standards” includes what standards?

Answer 2

• International Accounting Standards (IAS)
• International Financial Reporting Standards (IFRS)
• IFRIC Interpretations
• SIC Interpretations

Question 3

What is the Private Company Council?

Answer 3

The financial Accounting foundations (FAF) created the Private Company Council (PCC) to inprove standard setting for privately held companies in the U.S

The goal of the PCC is to establish alternatives to U.S. GAAP, where appropriate, to make private company F/S more relevant, less complex and cost-beneficial

accounting alternatives for private companies are incorporated into the relevant sections of the ASC

Question 4

Primary users of general purpose financial report?

Answer 4

Existing and potential:

• investors
• lenders
• other creditors

Question 5

Name the pervasive constraint on the information provided in Financial reporting

Answer 5

“Cost Constraint”: the benefits of reporting financial info must be greater than the costs of obtaining and presenting the information

Question 6

Name the FUNDAMENTAL QUALITATIVE characteristics of useful financial information

Answer 6

RELEVANCE AND FAITHFUL REPRESENTATION

Question 7

3 elements of relevance

Answer 7

(passing confirms money)

• predictive value
• confirming value
• materiality

Question 8

3 elements of faithful representation

Answer 8

(completely neutral is free from error)

• neutrality
• completeness
• freedom from error

Question 9

name the ENHANCING QUALITATIVE characteristics of financial information

Answer 9

Comparability, Verifiability, Timeliness, and Understandilty

Question 10

According to SFAC No. 5 what should a full set of financial statements include?

Answer 10

• Statement of Financial Position (BALANCE SHEET)
• Statement of Earnings (INCOME STATEMENT)
• Statement of Comprehensive Income
• Statement of Cash Flows
• Statement of Changes in owner’s equity

Question 11

difference between realization and recognition?

Answer 11

realization: when sold and converted to cash (or claims to cash)
recognition: when recorded in the f/s

Question 12

10 elements of financial statements according to SFAC No. 6 (CREG LALEID)

Answer 12

C comprehensive income
R revenues
E expenses 
G gains &
L losses
A assets
L liabilities
E equity (net assets)
I investments by owners
D distributions to owners

Question 13

6 elements of F/S according to the IASB framework

Answer 13

assets. liabilities. equity income(rev &gains). expenses (exp & losses). Capital Maintenance adjustments.

Question 14

5 elements of the PV MEASUREMENT per SFAC No. 7

UVOTE

Answer 14

U the price for bearing UNCERTAINTY
V expectations about timing VARIATIONS of future CF
O OTHER factors (liquidity issues, and mkt imperfections)
T TIME value of money (the risk-free rate of interest)
E ESTIMATE of future cash flow

Question 15

Describe the expected cash flow approach for PV computations

Answer 15

Considers a range of possible CF and assigns a (subjective) probability to each cash flow in the range to determine the weighted average, or “expected” future cash flow

Question 16

presentation or of major components of an income and retatined earnings statement (IDA)

Answer 16

Income (loss) from continuing operations
Income (or loss) from Discontinued operations
= I/S

Cumulative effect of a change in accounting principle - RE STMT

Question 17

The gain (loss) from discontinued operations can consist of

Answer 17

an impairment loss, a gain (loss) from actual operations, and a gain (loss) on disposal

Question 18

what period of impairment loss, a G/L from actual operations, G/L on disposal reported?

Answer 18

all reported in the period in which they occur.