FAR - 1 Accounting Concepts Flashcards
Historical Cost
The relevant attribute for plant assets and most inventories
Replacement cost (current cost)
Is used to measure certain inventories
Current Market Value
Is used to measure some marketable securities
Net realizable value
Is used to measure short-term receivables and inventories measured at
a) the lower of cost or NRV or
b) LCM
Present Value
Most relevant method of measurement of time Value of money concepts
Form 10-K
Filed within 60 days by large accelerated filters
Contains MD&A
Contains audited FS
Form 10-Q
Report quarterly FS
Filed within 45 days by nonaccelerated fillers
Form 8-K
Report of change in CPA Change in control Acquisition or disposition of significant amount of asset not in ordinary course of business Bankruptcy or receivership Resignation of Director Filed within 4 days
Regulation S-X
Governs the reporting of FS including Notes and Schedules
Regulation S-K
Provides disclosure standards
Covers certain aspects of corporate annual reports to shareholders
Reporting model describe in the guidance on not-for-profit FS
Applies to nongovernmental not-for-profit entities
According to FASB conceptual framework, noncurrent payables
Measured and reported at present value of future cash flows
Objectives of financial reporting is applicable to governmental entities
Provide information for assessing service efforts and accomplishments
Objectives applicable to business entities not to governmental entities
Assist in cash flow prospects
Some costs cannot be directly related to particular revenue but are incurred to obtain benefits that are exhausted in the period in which the costs are incurred
Salesperson’s monthly salaries
Certain costs of doing business capitalized when incurred and depreciated or amortized over subsequent accounting period
Is to match the costs of production with revenues as earned
Recognition revenue from the sale of goods under IFRS
- Entity transfers significant risks and rewards of ownership
- Entity has neither continuing management involvement to an extent associated with ownership nor effective control over the goods
- The amount of the transaction can be reliability measured
- It is probable that the economic benefits will flow to the entity
- Transaction costs can be reliably measured
Deferred gross profit on installment method
Reported as current asset section as a contra account
Revenue Recognition
Revenues may be recognized as earned by production and delivery
Revenue from interest and rent recognized based on passage of time
Revenues and gains are realized when the related assets are readily convertible to known amounts of cash or claims to cash. They usually measure by exchange prices of assets or liability involved
Assumption
Economic entity
Periodicity
Going concern
Monetary unit
Principle
Revenue recognition
Full disclosure
Matching principle
Historical cost
Constraint
Conservatism
Industry practices
