Concepts CH 1

Question 1

Fundamental Characteritics

Answer 1

Relevance

Faithful Representation

Question 2

Enhancing Characteristics

Answer 2

Compartiability
Verifiability
Timeliness
Understandabiilty

Question 3

Aspect of Fundamental Charateristics - Faithful Representation

Answer 3

Completeness
Freedom From Error
Neutrality

Question 4

Assumptions

Answer 4

Economic Entity
Going Concern
Monetary Unit
Periodicity

Question 5

Principle

Answer 5

Historical Cost
Revenue Recognition
Matching
Full-Disclosure

Question 6

Constraint

Answer 6

Costs (pervaisive)
Industry
Practice
Conservatism

Question 7

Financial Statements

Answer 7

Primary means of coummunication for info to external users

Question 8

Notes to F/S

Answer 8

Present essential info to amplify or explain F/S amounts

Question 9

Supplementary Info F/S

Answer 9

(MD&A) Additional info and more

Question 10

Accrual Accounting

Answer 10

Accruals
Deferrals
System & Rational Allocation
Amortization
Recognition
Realization

Question 11

PV Measurement 5 Elements

Answer 11

EFC
Expectation about availability
TMV
Price of uncertainty in an Asset/Liability
Other Factors

Question 12

Rev Recognition - Measurement

Answer 12

Measured by exchange prices of assets and liabilities involved

Question 13

Rev & Gain Recognized when

Answer 13

Goods/Services have been exchanged for cash or claims to Cash - Realized and Earned

Question 14

Aspect of Fundamental Charateristics - Relevance

Answer 14

Materiality
Predictive Value
Confirmatory Value

Question 15

Objective of Financial Reporting

Answer 15

Provide Information

• Useful in investment and credit decisions
• Useful in assessing c-flow prospects
• About entity resources and claims to them and change in them

Question 16

Only Authoritative financial accounting guidance for non-governmental entites

Answer 16

FASB ASC

SEC pronounements

Question 17

The information financial accounting pertains to

Answer 17

Individual business enterprises rather than to industries or economy as whole or to members of society as consumers

Question 18

MD&A section of annual report

Answer 18

Covers three financial aspects of firm’s business: liquidity, capital resources and results of operations

Question 19

Revenue/Expense recognition cause and effect Direct

Answer 19

If a direct relationship exists expense should recognized when revenue is (Sales Commission)

Question 20

Consumption of a benefit may occur when

Answer 20

1) Expenses are matched with revenues
2) They are allocated on a systematic and rational basis
3) Cash is spent or liabilities are incurred for goods and services that are used up simultateously or soon there after

Question 21

Gains and Losses result from

Answer 21

Peripheral or incidental transactions and from other events and circumstances stemming form environment that may be largely beyond control of entity or management

Question 22

Matching

Answer 22

associating cause and effect

Question 23

Accrual Accounting

Answer 23

Determination of periodic earnings and financial position is dependent upon the measurement of all economic resources and obligations an changes in them as they occur

Question 24

Only information that can influence users of the financial statements must be reported

Answer 24

Materiality

Question 25

Residual Interest in assets

Answer 25

Equity

Question 26

Reliabilty

Answer 26

Is a qualitative characteristic of GASB's conceptual framework.

Question 27

Regulation S-X governs

Answer 27

the reporting f/s, including notes and schedules for both annual and interim statements

Question 28

The first step in FASB's standard setting process is

Answer 28

ID of financial reporting issues based on communications with stakeholders

Question 29

After FASB analysis step 2

Answer 29

Add project to technical agenda

Question 30

Step 3

Answer 30

Deliberated at public meetings

Question 31

Step 4

Answer 31

Exposure draft

Question 32

Step 5

Answer 32

Rediliberate

Question 33

Final Step

Answer 33

Majority Vote for ASU

Question 34

Changes in ECF may result in

Answer 34

1) Fresh start re-measurement 2) Change in plan interest amortization Adjusting the carrying amount to PV of remaining future C-flows is preferred

Question 35

What is the underlying concept governing GAAP pertaining to gain contingencies

Answer 35

Conservatism

Question 36

Financial Capital Maintenance concept is the basis of

Answer 36

1) Traditional F/S 2) Full set of F/S (including CI) Under this concept, a return on investment results only if the financial amount of net assets at the end of the period exceeds the amount at the beginning of the period. San transaction with owners

Question 37

Reliability is also improved when a valuation method is available that is

Answer 37

1) Verifiable 2) Representationally Faithful 3) Free From bias

Question 38

Under conservatism constraint

Answer 38

When alternative accounting methods are appropriate, the one have the less favorable effect on net income and total assets is favorable. The understatement of assets is to be avoided so that earnings are not overstated when assets are realized

Question 39

Conservatism constraint however does not permit

Answer 39

deliberate understatement of assets and net income (not recognizing contingency gain)

Question 40

Elements of F/S directly related to measuring performance and status

Answer 40

1) Assets 2) Liabilities 3) Equity 4) Revenues 5) Expenses 6) Gains 7) Losses

Question 41

Only relate to business

Answer 41

1) Owner investment 2) Distributions to owners 3) Comprehensive Income

Question 42

SFAC

Answer 42

describe the objectives, qualitative characteristics, elements, and other fundamental concepts that guide the FASB in developing sound accounting principles. Non authoritative

Question 43

Reporting LIFO inventory at the lower of cost or market (LCM) is a departure from the accounting principle of

Answer 43

Historical Cost

Question 44

10K & 10Q Large Accelerated filers

Answer 44

60 and 40

Question 45

10K & 10Q Accelerated filers

Answer 45

75 and 40

Question 46

10K & 10Q nonaccelerated filers

Answer 46

90 and 45

Question 47

Stakehoders of NFP

Answer 47

Concerns with services provided and ability to provide them