FAR- Accounting Standards Flashcards
What is the SEC?
The US Security and Exchange Commission is a government entity created to protect the interest of investors by ensuring full and adequate disclosure by publicly traded companies.
What type of rules are usually issued by SEC
The SEC issues financial reporting releases that usually agree with US GAAP
What are the 3 steps in the SEC rule making process?
- Concept Release
- Rule Proposal
- Rule Adoption
What Act created the SEC?
The 1934 Securities Exchange Act
Generally Accepted Accounting Principles (GAAP) are:
The basic concepts underlying financial accounting and reporting
What is Historical Cost?
As a measurement basis, historical cost is the most objectively determinable and is the proper basis for the recording of many asset acquisitions, expenses, costs, creditor equities and owners equities.
What is Revenue Recognition?
Revenue is recognized when it is earned, measurable, and collectible.
What is Matching?
Net Income or loss for an accounting period is determined by the process of associating realized revenues with those expenses and expired costs necessary to generate them.
What is consistency?
To enhance financial statement comparability, an entity employs the same accounting procedures from period to period. Changes with GAAP should be justified by more appropriate presentation of financial position and results of operations.
What is Disclosure?
Financial Statements should include all information germane to the formation of valid business decisions. The user must neither be burdened with information overload or misled by the exclusion of material facts.
What is Objectivity/Verifiability?
The economic activity which underlies financial statements must not only be substantive in fact but also be presented without bias so as to be subject to similar determination by other technically competent individuals.
What is a separate entity?
A business enterprise is a discrete unit of accountability whose economic activities are kept separate from those of its owners and other business enterprises.
What is Continuity/ Going Concern?
Conditions and events that raise substantial doubt about an entity’s ability to continue as a going concern.
Unit of Measure
The common denominator upon which all financial data are based is the monetary unit
Periodicity
The life of an enterprise is divided into artificial time periods to facilitate reporting and decision making.
