Overview of GAAP

Question 1

1. recognized as authoritative by US SEC and AICPA
2. establishes accounting concepts and standards for financial accounting and reporting and provides guidance on implementation of standards
3. provides a conceptual framework that helps to increase understanding of, and confidence in, financial information on the part of financial reports

Answer 1

FASB

Question 2

FASB ASC includes:

Answer 2

AICPA Statement of Position
FASB Statements
Accounting Research Bulletins

Question 3

Deferred Revenue

Answer 3

Liability - Cash received before revenue earned

Examples: Rent, subscriptions, gift certificated

Question 4

Accrued Asset

Answer 4

Asset - Revenue earned before cash received

Examples: Sales on account, interest, rent received

Question 5

Deferred Expense

Answer 5

Asset - Cash paid before expense incurred

Examples: Prepaid insurance, supplies, rent, PP&E

Question 6

Accrued Expense

Answer 6

Liability - Expense incurred before cash paid

Examples: Salaries, wages, interest, taxes

Question 7

Accrual to Cash

Answer 7

1) A = L + E
2) ΔA = ΔL + ΔE
3) Δcash + Δother assets = ΔL + ΔE
4) Δcash = ΔL + ΔE − Δother assets