Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

1Financial Reporting > Module 9a > Flashcards

Module 9a Flashcards

1
Q

Who has the mandate to write US GAAP

A

The SEC has the mandate but they have always delegated it to others.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Who writes GAAP?

A

The FASB

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is the objective of GAAP

A

The objective of general purpose financial reporting is to provide financial information about the reporting entity that is useful to existing and potential investors, lenders, and other creditors in making decisions about providing resources to the entity.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is the highest level of Authority for GAAP?

A

FASB statements of accounting standards and interpretations, FASB Staff Positions, AICPA Accounting Research Bulletins, Accounting Principles Board Opinions (not superseded by the FASB)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is the 2nd highest level of authority for GAAP?

A

FASB Technical Bulletins, AICPA Industry audit and accounting guides (if cleared by FASB), Statements of Position

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is the 3rd highest level of authority for GAAP?

A

AICPA accounting standards executive committee practice bulletins (that have been cleared by FASB), Consensuses positions of the FASB Emerging Issues Task Force, and EITF Abstracts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is the lowest level of authority for GAAP?

A

Implementation guides (Q&A’s) ACIPA Accounting Interpretations, AICPA industry audit and accounting guides, Practices that are widely recognized and prevalent

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is materiality?

A

it is an error or omission which would effect the judgment of a reasonable person who is relying on the financial statement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Who is not a primary user of financial statements according to GAAP?

A

Regulators and members of the public, management.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What are the Qualitative Characteristics?

A

They establish criteria for selecting and evaluating accounting alternatives which will meet the objectives.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What are the fundamental qualitative Characteristics?

A

1) Relevance - Which is Predictive value, and confirmatory value. 2) Faithful representation - Which is complete, nuetral, and Free from Error

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What are the enhancing qualatitive characteristics?

A

Comparability, Verifiability(both direct and indirect), timeliness, and Understandability

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What are the 2 basic concepts of capital maintenance?

A

1)Return on Capital(Earnings) or Financial Capital. 2) Return of Capital (Capital Recovery). or Physical Capital

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is Capital Maintenance?

A

The notion that before any capital can be returned during a period to the owners the company has to be “Well Off” at the end of the year.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is the Financial Capital definition of Well-Offness?

A

Earnings may not be recognized untill the dollar investment in net assets, measured in units of money or purchasing power is returned.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is the Physical Capital definition of Well-Offness?

A

Earns may not be regognized untill the current replacement costs of assets with the same productive capabilities of the assets used up are returned. (Cost Accounting)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is the SFAC Definition of Comprehensive Income?

A

Any change to total Shareholder Equity which does not involve the shareholders or Owners. NOT GAAP Definition

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is the ACS Codification organization?

A

Topics- Subtopics -Sections - Subsections

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

ACS Section 105 covers?

A

Generally Accepted Accounting Principles,

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

ACS Sections 200’s cover what basic theme?

A

Presention of the financial Statements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

ACS Sections 300’s cover What basic theme?

A

Assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

ACS Sections 400’s Cover What basic Theme?

A

Liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

ACS Sections 500’s Cover What basic Theme?

A

Equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

ACS Sections 600’s Cover What basic Theme?

A

Revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

ACS Sections 700’s Cover What basic Theme?

A

Expenses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

ACS Sections 800’s Cover What basic Theme?

A

Broad Transactions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

ACS Sections 900’s Cover What basic Themes?

A

Industry

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

ACS Section 808 covers?

A

Collaborative arrangements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

ACS Section 958 Covers?

A

Not - For Profit Entities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

What is the general rule under Accrual based accounting?

A

Revenue is generally recognized at the point of sale? Or at time when service is performed?

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Is Cash based accounting GAAP?

A

No, you have to convert Cash based statements to accrual for GAAP Purposes.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

What is an Asset

A

A probable future economic benefit controlleed by a particular entity as a resuly of past transaction or events.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

What is a liability?

A

A Probable future sacrifice of economic benefit, arising from present obligations of a partiular entity that result from past transactions or events.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

What is Equity?

A

the owners residual interest in the assets of an entity that remains after deducting liabilties.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

What is Revenues?

A

increases in assets, or decreases in liablities during a period from delivering goods, rendering services, or other activities constituting the entities major or central operations

36
Q

What is expenses?

A

Decreases in assets or increases in liabilities during a period from delivery of goods, rengering of services, or other activities constituting the entity’s major or central operations

37
Q

What are gains(Losses)?

A

Inreases (Decreases) in equity from peripheral transactions of entities excluding revenues (expenses) and investments by owners (Distributions to owners)

38
Q

What is the matching principle

A

Simultaneous recognition of revenuew with expenses which are related directly or jointly to the same transaction or events

39
Q

What is investments by Owners?

A

Cash or other asssets given to the company from the owner, could also be conversion of the company’s liabilities

40
Q

What is Investments to owners?

A

Assets or other items, but could also include providing services to the owner, or conversion of the owner’s liabilties.

41
Q

What is the earnings process?

A

It is the productiion and distribution of Goods or services so that the firm can pay for goods and servies it uses and provide return to owners

42
Q

What is the Cost-Benefit Assumption?

A

The the costs of providing accounting informaiton must not out-weigh the benefits that can be derived from using the information

43
Q

What is conservatism?

A

When in doubt, choose the solution that will be least likely to overstate assets and income.

44
Q

What are the 3 types of Journal entries

A

Transaction, adjusting, and closing

45
Q

What is the current balance in Cash to Accrual conversions

A

IT is the Cash Basis in the account.

46
Q

What is the correct balance in Cash to Accrual Conversion

A

It is the accrual basis.

47
Q

When adjusting balances in cash to Accrual Conversions what financial statements are generally used?

A

You typically will use 1 balance sheet account and 1 Income statement Account

48
Q

Formula 1 to convert Collections from Sales to Sales

A

Collections from Sales + (Ending AR + AR Write-off) - Beginning AR = Sales

49
Q

Formula to convert Collections from other revenues to other revenues

A

Collections from other revenues + (Beg. Unearned Rev + Ending Rev Receivable) - Ending Unearned Rev + Beg Rev Rec) = other revenue

50
Q

Formula to convert payment for purchases to COGS

A

Purchases + (Beg Inventory + Ending AP) - (Ending Rev + Beginning AP) = COGS

51
Q

When is revenue recognized in a Installment Sale?

A

It is only recognized a cash is collected. Only used where “collection of the sale price is not reasonably assured”

52
Q

What is the Deferred Gross Profit Formula for an Installment Sale?

A

Ending AR * Gross Profit %

53
Q

What is the Realized Gross Profit Formula for an Installment Sale?

A

Cash collected * Gross Profit %

54
Q

What is the JE to record Sales in an Installment Sale?

A

DR A/R CR Installment Sales

55
Q

What is the JE to record Cash Receipt in an Installment Sale?

A

DR Cash CR A/R

56
Q

What is the JE to record COGS in an Installment Sale?

A

DR Installment COGS CR Inventory

57
Q

What is the JE to record Deferred Gross Profit in an Installment Sale?

A

DR. Installment Sale CR Installment COG CR Deferred Installment Sale

58
Q

What is the JE to recognized Gross Profit?

A

DR. Deferred Installment Sale CR Gross Profit Realized

59
Q

What is the Cost recovery Method of Income?

A

Stipulates that no profit is recognized until Cash Receipts exceed Costs. Interest revenue is also deferred until costs are recovered.

60
Q

When is the Cost recovery Method used?

A

It is because the uncertainty of collection is so great.

61
Q

What is SFAC 7?

A

SFAC presents a framework for using cash flow information as the basis for accounting measures

62
Q

What does SFAC 7 introduce?

A

SFAC 7 introduces the expected cash flow approach, it helps determine the amount, but no the when, where why to disclose the information.

63
Q

The expected cash-flow approach focuses on?

A

Explicit assumptions about the RANGE o possible estimated cash flows and their respective possibilities

64
Q

What is a Multiple Deliverable Revenue Arrangement?

A

When an entity has revenue generating activities to provide multiple products or services at different times.

65
Q

When is recorded as 2 separate Revenue units? Based on relative selling prices

A

When both conditions are present. 1) The item has a stand-alone basis. 2) The arrangement includes a right of return (undelivered item must be in contol of the vendor)

66
Q

When is the Milestone Method of Accounting used?

A

It is used in accounting for R&D arrangements in which revenue to the vendor is contingent on achieving 1 or more substantive milestones related to deliverables.

67
Q

What is a substantive milestone?

A

an uncertain event that can only be achieved based on the vendor’s performance and 1) is commensurate with vendors performance 2) it relates to past performance 3) It is reasonable relative to all of the deliverables and payment terms

68
Q

What must be disclosed in the notes for Substantive Milestone arrangements?

A

1) description of the arrangement 2) description of each milestone and related contingent consideration 3) a determination of whether each milestone is considered substantive 4) The factors considered in determining if the milestone is substantive 5) The amount of consideration recognized

69
Q

What is IFRS?

A

International Financial Reporting Standards

70
Q

Who issues IFRS?

A

IASB issues IFRS

71
Q

Who issues interpretations of the standards?

A

IFRS Interpretive committee

72
Q

Is IFRS a rule based or principle approach?

A

Principle Based Approach

73
Q

What is Revenue called for IFRS?

A

Income

74
Q

How many elements of Financial Statements exists for IFRS?

A

5 elements: Assets, Liabilities, Equity, Income and Expenses

75
Q

Definition of Assets for IFRS

A

A resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity.

76
Q

Definition of Liability for IFRS

A

A Liability is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources

77
Q

Definition of Equity for IFRS

A

Equity is the residual interest in the assets of the entity after deduction all of its liabilities

78
Q

Definition of Income for IFRS

A

Increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants

79
Q

Definition of Expenses for IFRS

A

Decreases in economic benefits during the accounting period in the form of outflows or depletions of accepts or incurrence’s of liabilities that result in decreases in equity, other than those relating to distributions to equity participates

80
Q

Remember about Income and Expenses

A

Income is Revenue and Gains. Expenses are Expenses and Losses

81
Q

Remember about Assets

A

IFRS provides for capital maintenance adjustments

82
Q

Revenue for IFRS is recognized when:

A

1) Risks and rewards of ownership are transferred 2)Entity does not retain continuing involvement 3) The amount can be measured 4) It is probable that economic benefits will flow to the entity 5) The cost incurred can be measured

83
Q

First-time adopters of IFRS

A

Generally the adoption involves restating assets, liabilities, and equity using IFRS principles

84
Q

What is the date of Transition to IFRS?

A

The beginning of the earliest period for which the entity presents full comparative information.

85
Q

What is the first IFRS reporting period?

A

IS the latest reporting period covered by an entity’s first IFRS financial statements.

86
Q

What is an option for a first time adopter

A

Can retrospectively adopt IFRS for all period presented, or adjusting assets, liabilities through retained earnings in the period of adoption.

87
Q

What does a first time adopter do for PPE?

A

they can either elect a fair value election, or they may use various methods to determine the FV of the assets at time of adoption

1Financial Reporting (21 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions