Wiley - Accrual Accounting

Question 1

What topics does the Financial Accounting Standards Board (FASB) Accounting Standards
Codification not include?

Answer 1

Other comprehensive basis of accounting
Cash basis
Income tax basis
Regulatory accounting principles

Question 2

What purpose does the Financial Accounting Standards Board (FASB) Accounting Standards
Codification serve?

Answer 2

The FASB Accounting Standards Codification is the sole source of authoritative U.S.
generally accepted accounting principles for nongovernmental entities, except for the
Securities and Exchange Commission guidance.

Question 3

What are long-term assets?

Answer 3

Assets that are not classified as current assets. Long-term assets are reported on the
balance sheet and represent a company’s property, equipment, and other capital assets
(reduced by depreciation) expected to be usable for more than one year.

Question 4

What is the Accounting Principles Board?

Answer 4

The entity that published 31 opinions, some of which are now part of the Codification.

Question 5

What is the classification of assets that are in the form of cash, or will be converted into
cash, or will be consumed within one year or the operating cycle of the business, whichever
is longer?

Answer 5

The classification is current assets.

Question 6

What are the seven key components of the general-purpose external financial report?

Answer 6

1. Income statement
2. Balance sheet
3. Statement of cash flows
4. Statement of retained earnings
5. Statement of comprehensive income
6. Footnote disclosures
7. Auditor’s opinion

Question 7

When is revenue recognized under accrual accounting?

Answer 7

Revenues are recognized when earned and collection is reasonably assured, regardless of
the period of cash collection.

Question 8

When are expenses recognized under accrual accounting?

Answer 8

Expenses are recognized when incurred, regardless of the period of cash payment.

Question 9

Which agency enforces generally accepted accounting principles (GAAP)?

Answer 9

The Securities and Exchange Commission (SEC)

Question 10

What body developed generally accepted accounting principles (GAAP)?

Answer 10

The Financial Accounting Standards Board (FASB)

Question 11

What does generally accepted accounting principles (GAAP) address?

Answer 11

Recognition, measurement, and disclosure