FAR CPA EXCEL

Question 1

What does the SEC do?

Answer 1

It administers the US securities laws, most notably the Securities Act of 1933 and the Securities Exchange Act of 1934 as well as other

Question 2

What is the main purpose of the SEC

Answer 2

The main purpose of the SEC is to promote efficient allocation of capital by maintaining open, orderly, and fair securities markets.

Question 3

What are the final three steps in the standard setting process?

Answer 3

1. Evaluate research and comments from interested parties and issue an exposure draft
2. Solicit additional comments
3. Finalize new accounting guidance and issue accounting Standards Update (ASU)

Question 4

What is the role of the Financial Accounting Foundation

Answer 4

The FAF exercises oversight of the Financial Accounting Standards Board, appoints the members of the FASB, and ensures funding.

Question 5

What is the American Institute of Certified Public Accountants? (AICPA)

Answer 5

The AICPA is the professional organization for participating CPAs

Question 6

What comprises United States GAAP

Answer 6

the FASB Accounting standards codification comprise authoritative US GAAP for publicly traded companies, SEC pronouncements are also GAAP

Question 7

How do user groups influence the outcome of the FASB

Answer 7

Users influence standards by providing input during the due process procedure.

Question 8

What are the first three steps the FASB uses when issuing a new accounting standard?

Answer 8

1. considers whether to add a project to its agenda in consultation with the FAF
2. Conducts research
3. holds a public hearing on the topic.

Question 9

What is the accounting principles board

Answer 9

The entity that published thirty-one opinions, some of which are now part of the codification

Question 10

What are long term assets?

Answer 10

Assets that are not classified as current assets. Long term assets are reported on the balance sheet and represent a companys property, equipment, and other capital assets (reduced by depreciation) expected to be useable for more than one year.

Question 11

When are expenses recognized under accrual accounting?

Answer 11

Expenses are recognized when incurred, regardless of the period of cash payment.

Question 12

What body developed GAAP

Answer 12

FASB

Question 13

What purpose does the FASB codification serve?

Answer 13

The FASB Accounting Standards Codification is the sole source of authoritative U.S. Generally Accepted Accounting Principles for nongovernmental entities, except for the Securities Exchange Commission guidance

Question 14

What is the classification of assets that are in the form of cash, or will be converted into cash, or consumed within one year or the operating cycle of the business, whichever is longer?

Answer 14

The classification is current assets

Question 15

What agency enforces GAAP

Answer 15

The SEC

Question 16

When is revenue recognized under accrual accounting

Answer 16

Revenues are recognized when earned and collection is reasonably assured, regardless of the period of cash collection

Question 17

What does GAAP address?

Answer 17

Recognition, measurement, and disclosure

Question 18

What topics does the Financial Accounting Standards Board (FASB) Accounting Standards Codification not include?

Answer 18

1. Other comprehensive basis of accounting;
2. Cash basis;
3. Income tax basis;
4. Regulatory accounting principles

Question 19

What are the seven key components of the general purpose external financial report?

Answer 19

1. Income Statement;
2. Balance Sheet;
3. Statement of Cash Flows;
4. Statement of Retained Earnings;
5. Statement of Comprehensive Income;
6. Footnote Disclosures;
7. Auditor’s Opinion.