Test 1 Flashcards
Securities Act of 1933
- protects investors
- full disclosure
- regulates IPOs
Securities Exchange Act of 1934
On a continuous basis, reports must be filed with the sec for publicly traded companies
-created SEC
FASB
SEC is ultimately responsible for GAAP, but FASB changes rules
Probable future economic benefits obtained or controlled as a result of past business transactions
Assets
Obligations to transfer assets or provide services in the future as a result of past business transactions
Liabilities
The residual interest in the assets after deducting liabilities
Equity
Increases in The equity due to transfers of value to obtain or increase ownership interests (or equity) in it
Investments by owners
Decrease in equity resulting from transferring assets, rendering services, or incurrence of liabilities by the enterprise to owners
Distribution to owners
The change in equity during a period due to transactions, events and circumstances from non-owner sources
Comprehensive income
Inflows and other enhancements of assets or settlements of liabilities from delivering of providing goods, rendering services, or carrying out other activities related to the central operations
Revenues
Outflows or consumption of assets or incurrence of liabilities from delivering or providing goods, rendering services, or carrying out other activities related to the central operations
Expenses
Increases in equity from peripheral or incidental transactions of an entity
Gains
Decreases in equity from peripheral or incidental transactions of an entity
Losses
What measurement is used when a company is in liquidation?
Current market value
Which measurement is mostly used?
Historical cost, because of conservatism
Sarbanes-Oxley Act of 2002
- top level management are ultimately responsible for statements and controls
- internal controls
- “Peek-a-Boo” audits auditors
- Auditors report is required
Business Equity
-business entity is separate and distinct from the owners of the entity
Going concern
Business will remain in business for an indefinite period of time
Time period
Statements are due at the same time every year
- calendar year ends December 31
- fiscal year ends a month other than December
Monetary unit
Standard of measure
-inflation
Historical cost
Most common
Used because it is objective and determinable
Conservatism
Choose measurement with the least favorable impact on net income and financial position
Realization
The point of recognition of revenue
- point of sale
- receipt of cash
Matching concept
Cost recognized when sale is made
