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FAR > F1M1 > Flashcards

F1M1 Flashcards

1
Q

SEC

A

legal authority to establish GAAP; however, tends to allow profession to self-regulate

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2
Q

FASB Codification

A

single source of authoritative literature nongovernmental GAAP; practices not included in codification are not GAAP

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3
Q

PCC

A

Private Company Council; standard for privately held companies; establish alternatives to GAAP where appropriate

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4
Q

Accounting Standards Update

A

Method in which FASB updates the Codification for new US GAAP; NOT AUTHORITATIVE LITERATURE, instead provide background info

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5
Q

Primary Users

A

External; existing and potential investors, lenders, and creditors

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6
Q

Qualitative Characteristics

A

likely to be most useful in making decisions about reporting entity based on financial information

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7
Q

Fundamental Qualitative Characteristics

A

Relevance and Faithful Representation

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8
Q

Relevance

A

PCM; Predictive Value, Confirmatory Value, Materiality

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9
Q

Predictive Value

A

information has predictive value if it can be used by users to predict future outcomes

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10
Q

Conformity Value

A

information has confirmatory value if it provides feedback about evaluation previously made by users

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11
Q

Materiality

A

if it could affect the decisions made by users

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12
Q

Faithful Representation

A

Complete, Neutral, Free from error

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13
Q

Complete

A

includes all information necessary for the user to understand the reported economic event, including descriptions and explanations

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14
Q

Neutral

A

free from bias in selection or presentation

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15
Q

Free from error

A

Free from MATERIAL error; does not include accuracy

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16
Q

Enhancing Qualitative Characteristics

A

Comparability, Verifiability, Timeliness, and Understandability

17
Q

Cost Constraint

A

Benefits outweigh the costs

18
Q

Characteristics of Nonbusiness Organizations

A

significant portion of their resources come from contributions and grants

their operating purposes are ‘other than’ to provide goods or services for a profit

they lack ownership interest that can be sold

19
Q

Users of Nonbusiness Organizations

A

resource providers, constituents, governing and oversight bodies, managers

20
Q

Objectives of nonbusiness organizations

A

resource allocation decisions, assessing services and ability to provide services, assessing management stewardship and performance

21
Q

Full set of financial statments

A
  1. Statement of financial positions (balance sheet)
  2. Statement of earnings (income statement)
  3. Statement of comprehensive income
  4. Statement of cash flows
  5. Statement of changes in owners equity
22
Q

Balance Sheet

A

Statement of financial position; financial risk

23
Q

Income Statement

A

Statement of earnings; performance and operating risk

24
Q

Fundamental Recognition Criteria

A

Definition, measurability, relevance, and reliability

25
Q

entity assumption

A

economic activity can be accounted for when considering an identifiable set of activities

26
Q

Periodicity Assumption

A

economic activity can be divided into meaningful time periods

27
Q

Accrual Accounting

A

revenues are recognized when performance obligation is satisfied and expenses are recognized in the same period as related revenue; record without exchange of cash

28
Q

Comprehensive income

A

sum of net income per the income statement plus other comprehensive income

29
Q

NVR formula

A

selling price- cost to sell

30
Q

five elements of present value measurement

A
  1. estimate of future cash flows
  2. expectations about timing variations of future cash flows
  3. time value of money
  4. the price for bearing uncertainty
  5. other factors
31
Q

Time value of money

A

risk free rate of interest

FAR (41 decks)

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