Framework & FASB Flashcards
The FASB has maintained that:
New GAAP should be neutral and not favor any particular reporting objective.
The FASB is a(n)…
A private sector body
Where can fair value disclosures of financial instruments be made?
In the body of the financial statements and/or the footnotes.
Which fund would a salaries expense appear?
Water utilities fund
What is the reason for the FASB accounting standards codification?
To out all accounting guidance in one place
How are changes to the FASB Accounting Standards Codification accomplished?
Accounting Standards Updates (ASU)
What is the highest structure of the FASB acidification
The highest structure is areas.
What is the lowest structure of the FASB Codification?
Paragraphs.
What are the major areas in the FASB Codification?
General principals 100 Presentation 200 Assets 300 Liabilities 400 Equity 500 Revenue 600 Expenses 700 Broad transactions 800 Industry 900
Which characteristics relate to both accounting relevance and faithful representation?
Comparability.
Conceptually, interim financial statements can be described as emphasizing:
Timeliness over faithful representation
Which characteristic of accounting information primarily allows users of financial statements to generate predictions about an organization?
Relevance
What are the primary qualitative characteristics of financial information?
Faithful representation and Relevance (FARR)
What is understandability?
Info is understandable if the user comprehends it with reasonable effort and diligence.
What is confirmatory value?
To be RELEVANT, accounting info should assist decision makers in confirming past predictions.
What is predictive value?
To be RELEVANT, accounting info should assist F/S users in making predictions about future events.
What is timeliness?
To be RELEVANT, info must be received in time to make a difference to the decision maker.
List the enhancing qualitative characteristics of financial info
Comparability
Verifiability
Timeliness
Understandability
What are the ingredients of RELEVANCE?
Predictive value
Confirmatory value
Materiality
What are the ingredients of faithful representation?
Completeness
Free from material error
Neutrality
What is verifiability?
Info is verifiable if different knowledgeable and independent observers can reach similar conclusions.
Neutrality
Accounting info must be free from bias
Completeness
Includes all data necessary to be faithfully representative
