Financial Accounting Standards

Question 1

What comprises US GAAP

Answer 1

The FASB codification comprise authoritative US GAAP for publicly traded companies. SEC pronouncements are also GAAP.

Question 2

What is the role of the FASAC

Answer 2

The FASAC provides guidance on major policy issues, project priorities, and the formation of task forces.

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 Updates (ASU’s)

Question 4

What is the main purpose of the SEC?

Answer 4

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

Question 5

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

Answer 5

1. ) considers whether to add a project to its agenda in consultation with the Financial Accounting Foundation (FAF).
2. ) conducts research.
3. ) Holds a public hearing on the topic.

Question 6

What does the SEC do?

Answer 6

It administers the US securities laws, such as the Securities Act 1933 and the SEC Act 1934.

Question 7

How do user groups influence the outcome of the FASB standards?

Answer 7

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

Question 8

What is the AICPA?

Answer 8

The AICPA is the professional organization for participating CPA’s.

Question 9

What is the FASB?

Answer 9

Establishes financial accounting stands for business entities.

Question 10

What is the role of the Financial Accounting Foundation (FAF)?

Answer 10

Exercises oversight of the FASB, appoints the members of the FASB, and ensures funding.

Question 11

What body developed GAAP?

Answer 11

FASB

Question 12

When is revenue recognized under accrual accounting?

Answer 12

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

Question 13

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

Answer 13

1. ) I/S
2. ) B/S
3. ) Stmt of Cash Flows
4. ) Stmt of Retained Earnings
5. ) Stmt of Comprehensive Income
6. ) Footnote disclosures
7. ) Auditor’s opinion

Question 14

What purpose does the FASB accounting standards codification serve?

Answer 14

Is the sole source of authoritative US GAAP for nongovernmental entities, except for the SEC guidance.

Question 15

What are long-term assets?

Answer 15

Assets not classified as current assets. Expected to be usable for more than one year.

Question 16

Which agency enforces GAAP?

Answer 16

SEC

Question 17

What topics does the FASB accounting standards codification not include?

Answer 17

• OCBOA
• cash basis
• income tax basis
• regulatory accounting principles

Question 18

What does GAAP address?

Answer 18

Recognition, measurement, and disclosure

Question 19

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

Answer 19

Current Assets

Question 20

What is the Accounting Principles Board

Answer 20

The entity that published 31 opinions, she of which are now part of the codification.

Question 21

When are expenses recognized under accrual accounting?

Answer 21

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

Question 22

When are expenses recognized under accrual accounting?

Answer 22

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