Flashcards in Ch 1 - Acct, Lang of Business GEN 2 Deck (12):
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
What is the purpose of GAAP?
to ensure that financial info fairly represents a firm's operating results and financial position
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
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
How many votes are required by the FASB to pass a statement of financial accounting standard?
Who creates GAAP?
Financial Accounting Standards Board
Who is the IASB?
International Accounting Standards Board
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
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
What do manager's of a business need to ensure about their financial info? (3)
What standards should financial statements be based upon?