FAR_Section_1.5

Question 1

Under accural accounting, revenue or gains are recognized when they are:

Answer 1

Earned or Realizable (realized)

Question 2

Earned

Answer 2

earnings process is complete (good delivered)

Question 3

Realizable (realized)

Answer 3

collect cash or a claim to cash

Question 4

Revenue Recognition

Answer 4

A binding arrangement exists (signed contract); Services renderedor delivery has occurred; Fixed or determinable price exists; Collection is reasonably assured

Question 5

Revenue Exoenses or losses as incurred

Answer 5

Economic benefit is used up (consumed) or assets lose future benefit (as incurred)

Question 6

The 4 areas of disclosure are:

Answer 6

Nature of Operations; Use of Estimates; Certain significant estimates; Current vulnerability associated with certain concentrations

Question 7

Nature of Operations

Answer 7

How the entity generates revenue suuch as major products and services and principal markets served

Question 8

Use of Estimates

Answer 8

Indicates that the preperation of financial statements in accordance with GAAP, as well as other applicable financial reporting frameworks, requires the use of estimates

Question 9

Certain Significant Estimates

Answer 9

Least reasonably possible that a material change in the estimate will occur in the near term

Question 10

Current Vulnerability due to certain concentrations

Answer 10

occurs when an entity does not diversify

Question 11

Statements on Financial Accounting Concepts (SFAC)

Answer 11

Not applications of GAAP to specific situations, but instead represent the ideas of the FASB as to the theoretical framework which it believes should guide financial accounting and reporting. SFAC 8 replaced SFAC 1 & 2

Question 12

Emerging Issues Task Force (EITF)

Answer 12

Created in 1934 by FASB; Short-term emerging issues; reach a consensus on how to account for a new and unsual financial transactions that have the potential for creating differing financial reporting practices