Intermediate Accounting 1 Exam 1 Flashcards
Due process
When something isn’t in the FASB guidelines nd someone wants to issue it in th accounting standard updates, then it goes thru it
Hierachy
Congress on top
SEC takes care of the public sector
GAAP are the principles that everyone follows
FASB is on the other side (private sector)
How are politics related to accounting
A change in accounting standards can result in substantial redistribution of wealth’s country. That’s why the government keeps close eye on FASB
Objective of the conceptual framework
To provide financial information that is useful to capital providers
Characteristics of conceptual framework
It has to be relevant, confirmatory value, faithful representation, timeliness
For something to be recognizable it has….
To be element, relevant, reliable, and measure
Economic entity assumption
Economic events can be identified specifically with the economic entity
Going concern assumption
Absence of information to the contrary, it is anticipated that a business entity will continue to operate indefinitely
Periodicity assumption
Life of a company can be divided into artificial time. To provide timely information to external users
Monetary unit assumption
In the US, financial statements elements should be measured in terms of the US dollar
Conceptual framework is not….
GAA P, it was just the basic of it
Comprehensive income the definition
Change in equity from nonowner transactions
Accumulated comprehensive income equation
Net income plus other comprehensive income
Assets
Probable future economic value
Liabilities
Probable future sacrifices of economic benefits
