F1 - M1 - Standards and Conceptual Framework Flashcards
____ has legal authority to establish U.S Generally accepted Accounting Principals
SEC
The SEC has allocated the ______ to establish GAAP and self-regulate
Accounting Profession
______ is the current standard-setting body in the US established in 1973
FASB (Financial Standards Board)
The most authoritative source of U.S GAAP is
FASB accounting standards Codification
Changes to existing authoritative GAAP for non issuers, nongovernment entities are communicated by the FASB, is it authorative?
Accounting Standards Updates (ASC) - Not authoriative - but provides background information, update the codifiation and desibe the basis conclusion on changes.
Name the primary users of the general purpose financial reports (3)
Existing and potential investors, Lenders and Creditors
_______ are not considered primary users
Regulators
______ is financial information that can make a difference in the decision made by users
Relevant Information
_______ is Information that has value if it can be used by users to predict future outcomes
Predictive Value
______ provides feedback about the evaluation previously made by a user
Confirmatory Value
______ information, if omitted could affect the decision by users based on the financial information
Materiality
To be used, Financial information must present the reported economic phenoma
Reliability or faithful representation
What are the elements of Relevant (3)
Predictive Value, Confirmatory Value, and Materiality
What are the elements of faithful representation (reliability)
Complete, Neutral, Free from Error
What are the enhancing qualitative Characteristics (4)
CUT-V ( Comparability, Understandability, Timeless and Verifiability
____ information is more useful when it can be compared with similar information about other entities or from other time periods
Comparability
_____ means that the difference knowledgeable and independent observers can reach consensus
Verifability
_____ information can be classified, characterized and presented clearly and concisely
Understandability
Means that information is available to users in time and be capable for influencing their decisions
Timeliness
______ says the benefits of reporting financial information must be greater than the cost of obtaining and presenting the information
Cost constraint
_______ is the process of formally recording or incorporating an item in the financial statements of an entity and classifying it as an asset, liability, equity, revenue or expense
Recognition
Name the statements in a Full set (5)
1) Balance sheet, 2) income statement, 3) Statement of Equity, 4) Statement of Cash flow, 5) Statement of Comprehensive Income
______ assumption - Economic activity can be accounted for when considered an identifiable set of activities
Entity Assumption
It is presumed that the entity will continue to operate in the foreseeable future
Going Concern