FAR 1.1 - Standards & Conceptual Framework

Question 1

Has legal authority to establish U.S. generally accepted accounting principles

Answer 1

The securities and exchange commission (SEC)

Question 2

Was established by the Securities Exchange Act of 1934

Answer 2

The SEC

Question 3

All companies that issue securities in the U.S. are subject to

Answer 3

SEC rules and regulations

Question 4

A part time committee of the AICPA that promulgated Accounting Research Bulletins which determined GAAP from 1939-1959

Answer 4

The Committee on Accounting Procedure (CAP)

Question 5

Another part time committee of the AICPA that issues Accounting Principles Board Opinions and interpretations which determined GAAP from 1959-1973

Answer 5

The accounting principles board (APB)

Question 6

An independent full-time organization that was established in 1973 and it has determined GAAP ever since

Answer 6

Financial Accounting Standards Board (FASB)

Question 7

Effective July 1, 2009, this became the single source of authoritative nongovernmental U.S. GAAP

Answer 7

The FASB Accounting Standards Codification

Question 8

This was created to improve standard setting for privately held companies in the U.S.

Answer 8

The Private Company Council (PCC)

Question 9

How does FASB update the Accounting Standards Codification for new U.S. GAAP issued?

Answer 9

By issues Accounting Standards Updates

Question 10

These are not authoritative literature, but provide background information, update the codification, and describe the basis for conclusions in changes in the codification

Answer 10

Accounting Standards Updates

Question 11

The fundamental qualitative characteristics of useful financial information are:

Answer 11

Relevance & Faithful Representation

Question 12

To be relevant, financial information must have what 3 things?

Answer 12

Predictive value and/or Confirming value
And must be Material

Question 13

Faithful representation requires the financial information to be

Answer 13

Complete
Neutral
And free from error

Question 14

What are the 4 enhancing qualitative characteristics that enhance the usefulness of information that is relevant and faithfully represented?

Answer 14

Comparability
Verifiability
Timeliness
Understandability

Question 15

The 4 ways in which the requirements to include information in the notes are limited are:

Answer 15

Relevance
Cost constraints
Potential Adverse Consequences
Future Oriented Information