chapter 1 standard setting and income statement

Question 1

GAAP self-regulated？

Answer 1

Yes

Question 2

FEDPRIA

Answer 2

FASB Emerging issues Task Force Derivative implementation group issues Accounting Principles board opinions Accounting Research Bulletins Accounting Interpretations AICPA

Question 3

SEC Standards

Answer 3

Regulation for accounting is emerging Regulation S-X Financial Reporting Releases Accounting series releases Interpretative Releases Staff Accounting Bulletins EITF topic D and SEC staff observer comments

Question 4

Primary Users?

Answer 4

Existing and potential investors, lenders and other creditors. government sec X

Question 5

Qualitative characteristics of useful financial information

Answer 5

Relevance and faithful

Question 6

relevance

Answer 6

capable of making a difference in the decisions made by users passing confirms money Predictive value:predict future confirming value: provides feedback materiality:

Question 7

Faithful

Answer 7

Reliable completely neutral is free from error completeness neutrality:free from bias freedom from error

Question 8

enhancing qualitative charateristics

Answer 8

compare and verify in time to understand comparability verifiability timeliness understandability

Question 9

revenue recognition principle

Answer 9

earned: entity has substantially accomplished realized

Question 10

matching principle

Answer 10

expenses are necessarily incurred to generate revenue

Question 11

Elements of Financial Statements

Answer 11

REGL AlE needs ID Comprehensive Revenue Expense Gain loss Assets Liability Equity Investments by owners Distributions to owners: these two excluded from comprehensive ubcine

Question 12

IFRS Capital maintenance adjustments?

Answer 12

are increases and decreases in equity that arise from the revaluation or restatement of assets and liabilities.

Question 13

Five elements of present Value measurement a. estimate of future cash flow b. expectations about timing variations of future cash flows c. time value of money( the risk-free rate of interest) d. the price for bearing uncertainty e. other factors( liquidity issues and market imperfections)

Answer 13

c d e impacts discount rate and future cash flow

Question 14

Reported on Income Statement

Answer 14

IDEA Income from continuing:operating activities+non operating gross of tax then net of tax Discontinued net of tax Extraordinary items net of tax Reported on Statement of Retained earnings! cumulative effect of change in accounting principle net of tax

Question 15

inventory cost

Answer 15

purchase price + freight in

Question 16

selling expense

Answer 16

freight out, salaries and commissions, advertising

Question 17

general administrative

Answer 17

officer’s salaries, accounting and legal, insurance

Question 18

non-operating

Answer 18

auxiliary activities, interest expense

Question 19

to LIFO and change in depreciation method

Answer 19

prospective

Question 20

cost method to Equity method

Answer 20

restate

Question 21

equity to cost method

Answer 21

prospective

Question 22

retained earnings

Answer 22

Question 23

Discontinued operation for IFRS

Answer 23

must be measured and component is reported at the lower of carrying value and fair value less costs to sell

Question 24

anticipated future gains or losses for discountined segment

Answer 24

not recognized until they occur

Question 25

Impariment loss+operating loss+gain/loss on disposal

Answer 25

=loss from discontined operation (before tax)

Question 26

infrequent but not unusual

Answer 26

seperate item as income from continue operation

Question 27

new estimate

Answer 27

prospective and in income from continue operation

Question 28

when a fixed asset is sold, gain or loss is recognized as part of income from

Answer 28

continuing operations. the amount of the gain or loss is =proceeds from the sale and the carrying amount of the fixed asset sold