M1, M2, M3 Flashcards
What are the Characteristics of Faithful Responsiveness
Completeness, Neutrality, Free From Errors
What are the Characteristics of Relevance
Predictive Value, Confirmatory Value, Material
What are the fundamentals qualitative charateristics
Faithful Representation and Revelance
What are the Four Enhancing Characteristics
Comparability: info to compare to other companies in same industry; Verifiability: observers can reach the same conclusion; Timeliness: infor is not recent enough; Understandability: user with understand of business can draw conclusions
What is the primary objective of financial reporting?
Providing information that is useful for decision making
What is the purpose of Interim financial statements and what enhancing characteristic will it use?
Timeliness: Interim financial statements emphasize timeliness by providing financial information based on actual performance to date and estimates prior to year end.
When a contract contains multiple service related performance obligations how do you know if the service has a distinct obligation?
When the services are all similar in nature and provided in the same manner it means the services can be combined in a single performance obligation. Just know when everything is the same it keeps it from being distinct. If the each service can be performed and accounted for independently it is distinct.
What are the components of G&A?
Accounting and Legal Fees, Officers Salaries, Insurance, Property Tax, Rent
What type of expense is sales representative?
Selling Expense
True/False: Revenue should be recognized evenly over the contract year
True: As this is GAAP-accrual basis of accounting
Unearned revenue
Is an increase to liability (as a credit) and becomes increase to revenue once the service is performed
What are discounted operations? Meaning how is it defined.
Discontinued operations is an accounting term for parts of a firm’s operations that have been divested or shut down. They are reported on the income statement as a separate entry from continuing operations.
What is the purpose of FASB?
FASB develops principles and attributes that allow organizations to understand the necessary elements to ensure a robust system of internal control.
What are examples of discounted operations?
Closure of unprofitable division.
Redundancy due to merger.
Sale of a product line.
Discontinuation of outdated services.
How are discounted operations recognized?
A discontinued operation may still make a gain or loss in the accounting period it ceased operations in. These gains or losses must be reported. However, often a discontinued operation was operating at a loss, so there may be some money realized from taxes at tax time.
