Ch 1 - Acct, Lang of Business GEN 2 Flashcards Preview

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Flashcards in Ch 1 - Acct, Lang of Business GEN 2 Deck (12):
1

When does SEC grant and exception to following GAAP for a publicly traded company?

when a company can show that following GAAP would produce information which is misleading

2

What is the purpose of GAAP?

to ensure that financial info fairly represents a firm's operating results and financial position

3

What are the 5 main steps of creating a GAAP?

1. discussion memorandum 2. public hearings
3. exposure draft
4. public hearings
5. statement of financial accounting standards vote and put into effect

4

Who is the American Accounting Association (AAA)? (2)

1. group of accounting educators
2. research possible effects of proposed FASB statements and offer their opinions

5

How many votes are required by the FASB to pass a statement of financial accounting standard?

4

6

Who creates GAAP?

FASB
Financial Accounting Standards Board

7

Who is the IASB?

International Accounting Standards Board

8

What are the two primary functions of the IASB?

1. deal with issues caused by lack of uniform accounting principles
2. makes recommendations to enhance comparability of reporting practices

9

What does an auditor's report include? (2)

1. auditor's opinion about fair presentation of operating results and financial position of business
2. confirms financial info is prepared in line with GAAP

10

What do manager's of a business need to ensure about their financial info? (3)

1. timely
2. accurate
3. fair

11

What standards should financial statements be based upon?

GAAP

12

What are the three general things financial info can help a mgr do?

1. control present operations
2. make decisions
3. plan for the future