F1 M1 Flashcards
When was SEC established and by who?
SEC was established by Securities Exchange Act in 1934
Who determined GAAP
Financial Accounting Standards Board (FASB - 1973-today): They determine GAAP
What is FASB’s ASC
Single source of nongovernmental U.S. GAAP: FASB’s ASC
What is Conceptual Framework?
Conceptual Framework: Created by FASB to provide pronouncements
What are the pronouncements and what do they do?
The pronouncements are called Statements of Financial Accounting Concepts (SFAC)
and they provide a basis for financial accounting concepts
What are two qualitative characteristics?
Two qualitative characteristics: Relevant + Faithful (reliable)
What are relevant’s qualitative characteristics?
Relevant: Predictive, Confirmatory, and Materiality (Passing Confirms Money)
What is faithful’s qualitative characteristics?
Faithful: Complete, Neutral, Free from Material Error (Completely Neutral is Free From
Error)
What are the enhancing qualitative characteristics?
Enhancing qualitative characteristics: Comparability (consistency), Verifiability,
Timeliness, Understandability (Compare and verify in time to understand)
5 kinds of measurement attributes?
5 kinds of measurement attributes: Historical cost (PPE), current cost/replacement cost
(inv), net realizable value (AR), current market value (stock), and present value of future
cash flows (bonds and leases)
What is Comprehensive Income?
Comprehensive Income: Sum of NI from IS and OCI
Two approaches to finding out the present value?
Two approaches to finding out the present value: Traditional and expected cash flow
approach
What does current market value mean?
Current market value (fair value) is the price to sell (not acquire) an asset
