Midterm Study CH1 Flashcards
when a current asset has a fair value higher than historical cost, must report historical cost to respect
historical cost principle
The SEC developes accounting standards for the FASB (t/f)
false
IASB purpose
promote uniform accounting standards globally
gaap is influenced by SEC (t/f)
true
gaap doesn’t have substantial authoritative support (t/f)
false
Why did the AICPA create the Accounting Principles Board
previous one lacked a structured set of accounting principles
financial accounting is the process of identifying, measuring, analyzing, and communicating financial information needed by management (t/f)
false
ways financial accounting is used
- decide when to invest
- buy/sell/hold equity
- evaluate borrowing capacity
how does accounting help the capital allocation process draw investment capital
providing timely, relevant info
the principal ways a company communicates financial info to external
financial statements
assumption/principle requires all info strong enough to affect choices of reasonably informed users should be reported
full dislcosure
FASB issues which: accounting standards updates, financial accounting concepts, accounting research bulletins
the first two
SEC approves each GAAP
false
statement of financial accounting concepts purpose
form conceptual framework to problem solve
if LIFO was used last period, it should be used current band future because of
consistency
