Accounting Standards and Conceptual Frameworks

Question 1

Legal authority to establish US generally accepted accounting principles (GAAP)

Answer 1

SEC

Question 2

In most cases, SEC has allowed the _______ ________ to establish GAAP and self-regulate

Answer 2

accounting profession

Question 3

Established in 1934. All companies that issues securities in the US are subject to this entity’s rules and regulations

Answer 3

SEC

Question 4

Established in 1973 and has determined GAAP since then

Answer 4

FASB (financial accounting standards board)

Question 5

Effective July 1, 2009, the FASB ______ _______ ______ became the single source of authoritative nongovernmental US GAAP

Answer 5

Accounting Standards Codification

Question 6

Accounting and financial reporting practices not included in the Codification are _____ ______

Answer 6

not GAAP

Question 7

Accounting Standards Updates are not ________ literature

Answer 7

authoritative

Question 8

Provides background information, updates the Codification, and describes the basis for conclusions on changes in the Codification

Answer 8

Accounting Standards Updates

Question 9

All new GAAP and SEC amendments are ____ ______ into the existing structure of the Codification

Answer 9

fully integrated

Question 10

Established in 2001 as a part of the International Financing Reporting Standards (IFRS) Foundation

Answer 10

International Accounting Standards Board (IASB)

Question 11

The purpose of IASB is to:

Answer 11

develop a single set of high-quality, global accounting standards

Question 12

Provides guidance on newly identified financial reporting issues not addressed in the IFRSs and assists the IASB in achieving international convergence of accounting standards

Answer 12

IFRIC (International Financial Reporting Interpretations Committee)

Question 13

_______ includes IFRSs, IASs, and interpretations developed by the IFRIC and the former SIC

Answer 13

IFRS

Question 14

SEC _______ the IASB/FASB convergence project

Answer 14

supports

Question 15

Statements of Financial Accounting Concepts (SFAC) are ____ _____

Answer 15

not GAAP

Question 16

The objective of general purpose financial reporting is to:

Answer 16

disclose entity’s performance

Question 17

Primary users

Answer 17

existing and potential investors, lenders, and other creditors who use financial statements to assess the reporting entity’s prospects for future net cash inflows to the entity

Question 18

Fundamental Qualitative Characteristics must have (2):

Answer 18

relevance & faithful representation

Question 19

Characteristics of relevance (3 ; passing confirms money):

Answer 19

predictive value, confirming value, materiality

Question 20

Characteristics of faithful representation (3: completely neutral is free from error):

Answer 20

completeness, neutrality, freedom from error

Question 21

Enhancing qualitative characteristics (4; compare and verify in time to understand)

Answer 21

Comparability, verifiability, timeliness, understandability

Question 22

Full set of financial statements (5)

Answer 22

Balance sheet (statement of financial position), income statement (statement of earnings), statement of comprehensive income, statement of cash flows, statement of changes in owners’ equity

Question 23

Conservatism principle

Answer 23

selecting the method that is least likely to overstate assets and understate liabilities`

Question 24

The two assumptions of IFRS:

Answer 24

accrual basis accounting & going concern

Question 25

Elements of financial statements (REGL ALE needs ID)

Answer 25

revenues, expenses, gains, losses, assets, liabilities, equity, investment by owners, distributions to owners

Question 26

Increases and decreases in equity that arise from the revaluation or restatement of assets and liabilities (associated with IFRS)

Answer 26

Capital maintenance adjustments

Question 27

Five elements of present value measurement

Answer 27

estimate future cash flow, timing, time value of money, price for bearing uncertainty, other factors (credit risk)

Question 28

Using the traditional approach for present value computations, _____ _______ _______ is paramount

Answer 28

interest rate selection

Question 29

Expected cash flow approach is more ______ than the traditional method

Answer 29

complex