FAR - FASB - Role & Standard Setting Process - GAAP & Accrual Accounting Flashcards
When is revenue recognized under accrual accounting?
Revenues are recognized when earned and collection is reasonably assured, regardless of the period of cash collection.
What purpose does the FASB Accounting Standards Codification serve?
The FASB Accounting Standards Codification is the sole source of authoritative US GAAP for nongovernmental entities, except for the SEC guidance.
What does GAAP address?
Recognition, measurement, and disclosure.
What topics does the FASB Accounting Standards Codification not include?
1) Other comprehensive basis of accounting (OCBOA)
2) Cash basis
3) Income tax basis
4) Regulatory accounting principles
Which agency enforces GAAP?
Securities and Exchange Commission (SEC)
What are the seven key components of the general purpose external financial report?
1) Income statement
2) Balance sheet
3) Statement of Cash Flows
4) Statement of Retained Earnings
5) Statement of Comprehensive Income
6) Footnote disclosure
7) Auditor’s opinion
What body developed GAAP?
The Financial Accounting Standards Board (FASB).
What is the Accounting Principles Board?
The entity that published thirty-one opinions, some of which are now part of the Codification.
When are expenses recognized under accrual accounting?
Expenses are recognized when incurred, regardless of the period of cash payment.
What is the classifcation 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?
The classification is current assets.
What are long-term assets?
Assets that are not classified as current assets. Long-term assets are reported on the balance sheet and represent a company’s property, equipment, and other capital assets (reduced by depreciation) expected to be useable for more than one year.
