Financial Reporting Standards

Question 1

The objective of financial reporting is to _________.

Answer 1

provide financial information that is useful to users in making decisions about providing resources to the reporting entity, where those decisions relate to equity and debt instruments, or loans or other forms of credit, and in influencing management’s
actions that affect the use of the entity’s economic resources

Question 2

The _________ sets financial reporting standards that have been adopted in many countries.

Answer 2

International

Accounting Standards Board (IASB)

Question 3

The US-based ___________has

developed similar financial reporting frameworks.

Answer 3

Financial Accounting Standards Board (FASB)

Question 4

US GAAP, as established by the FASB, is officially recognized as authoritative b
the SEC, however the SEC __________.

Answer 4

retains the authority to establish standards

Question 5

While technically not a regulatory authority, the ____________ regulate a significant portion of the world’s financial capital
markets.

Answer 5

International Organization of Securities Commissions (IOSCO)

Question 6

This act specifies the financial and other significant information that investors must receive when securities are
sold, prohibits misrepresentations, and requires initial registration of all public issuances of securities

Answer 6

Securities Act of 1933 (The 1933 Act)

Question 7

: This act created the SEC,
gave the SEC authority over all aspects of the securities industry, and empowered the SEC to require periodic reporting by companies with publicly traded
securities.

Answer 7

This act created the SEC,
gave the SEC authority over all aspects of the securities industry, and empowered the SEC to require periodic reporting by companies with publicly traded
securities.

Question 8

This act created the Public Company Accounting
Oversight Board (PCAOB) to oversee auditors.

Answer 8

Sarbanes–Oxley Act of 2002

Question 9

The 1933 Act requires companies offering securities to file a _______. New issuers as well as previously registered companies that are issuing new securities are required to file these statements.

Answer 9

registration statement

Question 10

These are forms that companies are required by the SEC to file annually. Form ___ is for US registrants, Form ___ is for certain
Canadian registrants, and Form ____ is for all other non- US registrants.

Answer 10

10-K, 40-F, 20-F

Question 11

The SEC requires that shareholders of a

company receive a ______ prior to a shareholder meeting.

Answer 11

proxy statement (Form DEF- 14A)

Question 12

Forms that companies are required to submit for interim periods (quarterly for US companies on _____, semiannually for many non- US companies on _____)

Answer 12

Form 10-Q, Form 6-K

Question 13

In addition to filing annual and interim reports, SEC registrants must report material corporate events on a more current basis. ________ is the “current report” companies must file with the SEC to announce such major events as acquisitions or disposals of corporate assets, changes in securities and trading markets, matters related to accountants and financial statements, corporate governance and management changes, and
Regulation FD disclosures.

Answer 13

Form 8-K (6-K for non-US registrants)

Question 14

These forms can be used to examine purchases and sales of securities
by officers, directors, and other affiliates of the company, who collectively are regarded as corporate insiders.

Answer 14

Forms 3, 4, 5 and 144

Question 15

Two bodies related to securities regulation established by the European Commission are the _____ and the _____. The ______consists of high- level representatives of member states and advises the European Commission on securities policy issues. ______ is an EU cross-border supervisor established to co- ordinate supervision of the EU market. Regulation still rests with the individual member states

Answer 15

European Securities Committee (ESC), European Securities and Market Authority (ESMA)

ESC, ESMA

Question 16

The IASB _________
sets forth the concepts that underlie the preparation and presentation of financial
statements for external users.

Answer 16

Conceptual Framework for Financial Reporting

Question 17

The Conceptual Framework identifies two fundamental qualitative
characteristics that make financial information useful: _______ and _______.

Answer 17

relevance, faithful representation

Question 18

The Conceptual Framework identifies

four enhancing qualitative characteristics: (4)

Answer 18

comparability, verifiability, timeliness, and

understandability

Question 19

The use of “accrual accounting” assumes that financial statements should _____.

Answer 19

reflect transactions in the period when they actually occur, not necessarily when cash movements occur.

Question 20

_________ refers to the assumption that the company will continue in
business for the foreseeable future.

Answer 20

“Going concern”

Question 21

______ means that an item is included in the balance sheet or income statement. ______ occurs if the item meets the definition of an element and satisfies the criteria for ______.

Answer 21

recognition

Question 22

________ is the process of determining the monetary amounts at which the
elements of the financial statements are to be recognized and carried in the balance
sheet and income statement

Answer 22

Measurement

Question 23

In reference to assets, ________ is the
amount of cash or cash equivalents that could currently be obtained by selling the asset in an orderly disposal. For liabilities, the equivalent to _________ is called __________ —that is, ___________ is the undiscounted
amount of cash or cash equivalents expected to be paid to satisfy the liabilities
in the normal course of business.

Answer 23

realizable value, “settlement value”

Question 24

In reference to assets, _______ is the amount of cash or cash
equivalents that would have to be paid to buy the same or an equivalent asset
today

Answer 24

current cost

Question 25

The Conceptual Framework does not address the general

contents of the financial statements, which are addressed in ________.

Answer 25

International Accounting

Standard (IAS) No. 1, Presentation of Financial Statements.

Question 26

The US GAAP is based on _____ and the IFRS are based on _______.

Answer 26

rules, principles

Question 27

Like the IFRS, the US GAAP permits FIFO and Weighted Average Method of inventory valuation, but also ____.

Answer 27

LIFO

Question 28

In the US GAAP, extraordinary items are _______ in the IFRS, they are ______.

Answer 28

Shown below (at the bottom of the income statement), Not segregated in the income statement.

Question 29

In the US GAAP, development costs are ______, in the IFRS, they are ______.

Answer 29

treated as an expense, capitalized (only if certain

conditions are satisfied)

Question 30

In the US GAAP, reversal of

inventory is _____, in the IFRS it is ______.

Answer 30

prohibited, permissible (if specified conditions are met)