FAR Module 9 Misc. Flashcards
SFAC 8, Chapter 1 covers what? (List of 6)
The objectives of general-purpose financial reporting. These include:
1) Information that is useful to primary users
2) information about the reporting entities assets and liabilities
3) changes in assets and liabilities
4) financial performance reflected by accrual accounting
5) financial performance reflected by past cash flow
6) changes in assets and liabilities not resulting from financial performance
What is the single source of US GAAP for non-governmental entities
The FASBs Accounting Standards Codification
SFAC 8, Chapter 3 covers what?
Qualitative characteristics of useful financial information (this is the chart outlining the pervasive constraint, fundamental qualitative characteristics, enhancing qualitative characteristics, and the threshold for recognition)
SFAC 6 covers what?
Elements of financial statements
What are the 10 Elements of Financial Statements outlined under the FASB SFAC 6
Assets Liabilities Equity/Net Assets Revenues Expenses Gains Losses Investments by owners Distributions to owners Comprehensive Income
What are the 4 basic assumptions regarding a business in accounting?
Economic Entity Assumption
Going concern assumption
monetary unit assumption
periodicity assumption
Under this assumption economic activity can be identified with a particular unit of accountability
Economic entity assumption
Under this assumption the business enterprise will have a long life.
The going concern assumption
Under this assumption money is the common denominator of economic activity and provides an appropriate basis for accounting measurement and analysis
The monetary unit assumption
Under this assumption the economic activities of an enterprise can be divided into artificial time periods. We report financial information periodically to apprise users of performance and economic status
The periodicity assumption
What are the four basic principles of accounting
The historical cost principle, the revenue recognition principle, the matching principle, the full disclosure principle
Under this principle GAAP requires that most assets and liabilities be accounted for and reported on the basis of acquisition price because it is the most reliable valuation
The historical cost principle
Under this principle revenue is generally recognized when realized or realizable, or earned.
Revenues are realizable when assets received or held are readily convertible into cash or claims to cash.
Revenues are considered earned when the entity has substantially accomplished what it must do to be entitled to the benefits represented by the revenues.
The revenue recognition principle
Under this principle expenses are to be matched to the revenues whenever it is reasonable and practicable to Do so
The matching principle
Under this principle accountants use their judgment in deciding what gets reported on the financial statements. If something does not appear on the statements then it may appear in the footnotes or in supplementary information.
The full disclosure principle
These generally amplify or explain the items in the main body of the statements
Footnotes
this contains other information that may be highly relevant but less reliable
Supplementary information
What are the three constraints in accounting
Cost-benefit relationship
materiality
conservatism
This constraint says that information is expensive. The costs of providing information must not outweigh the benefits that can be derived from using the information
Cost-benefit relationship
This constraint says that an item is material if it’s inclusion or omission would influence or change the judgment of a reasonable person
Materiality
This constraint says that when in doubt choose the solution that will be least likely to overstate assets and income
Conservatism
What section of the FASB ASC covers GAAP presentation
100
What section of the FASB ASC covers presentation of financial statements
200
What section of the FASB ASC covers assets
300
