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FAR > Conceptual Framework > Flashcards

Conceptual Framework Flashcards

1
Q

Who establishes GAAP?

A

FASB

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2
Q

Who has legal authority to establish GAAP

A

SEC

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3
Q

Who is subject to SEC rules and regulations?

A

All companies that issue securities in the US

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4
Q

F.A.S.B?

A

Financial Accounting Standards Board

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5
Q

Who establishes GAAP?

A

FASB

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6
Q

What is the FASB Accounting Standards Codification?

A

Single source of authoritative nongovernmental GAAP

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7
Q

If accounting and financial reporting practices are not included in the Codification then they are…

A

NOT GAAP

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8
Q

What Authoritative Literature is Included in Codification (Mnemonic)?

A

FEDPRIA

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9
Q

F in FEDPRIA

A

FASB

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10
Q

E in FEDPRIA

A

EITF Force Abstracts and Topic D

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11
Q

D in FEDPRIA

A

Derivative implementation Group Issues

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12
Q

P in FEDPRIA

A

Accounting principles board opinions

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13
Q

R in FEDPRIA

A

Accounting research bulletins

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14
Q

I in FEDPRIA

A

Accounting interpretations

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15
Q

A in FEDPRIA

A

AICPA

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16
Q

External users include:

A

Investors, Lenders, Creditors

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17
Q

Relevance Factors

A

Predictive value, Confirming value, Materiality

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18
Q

What are the enhancing qualitative characteristics?

A

Comparability, Verifiability, Timeliness, and Understandability

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19
Q

Full set of financial statements includes (5)

A

Balance sheet, Income Statement, Stmt of comprehensive income, Stmt of cash flows, Stmt of owners’ equity

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20
Q

Conservatism principle general rules

A

1 Recognize revenue/gains when earning process is complete

2 Recognizes expense/loss immediately

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21
Q

REGL on income statement

A

Revenue, expenses, gains, losses

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22
Q

ALE on balance sheet

A

Assets, liabilities, equity

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23
Q

Investments by owners`

A

Increase in assets from transfers of cash, property, or services from owners

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24
Q

Distribution to owners

A

Decreases in assets from transfers of cash, property or services or the incurrence of a liability to owners

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25
Q

What is the purpose IASB?

A

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

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26
Q

Accounting standards updates aren’t authoritative literature

A

but instead they provide 1) Background information 2) Update the codification 3) Describe the basis for conclusion for changes in the codification

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27
Q

The IFRC provided guidance on…

A

Newly identified financial reporting issues not addressed by IFRS

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28
Q

The IFRC help assist the….

A

IASB in achieving international convergence of accounting standards

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29
Q

IFRIC stands for

A

International financial report interpretations committee

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30
Q

What is IFRS?

A

Single set of accounting standards for the globe

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31
Q

What is the goal of the convergence of GAPP and IFRS?

A

A single set of high quality international accounting standards that a company can use for domestic and cross border financial reporting

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32
Q

Neutrality

A

Free from bias

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33
Q

Free from error

A

No error in the application of rules

34
Q

Enhancing Qualitative Characteristics (mnemonic)

A

Compare and verify in time to understand

35
Q

Comparability provides… (Example)

A

Consistency current vs. prior year

36
Q

Different knowledgeable and independent observers cam reach consensus that a particular depiction is faithfully represented

A

Verifiability

37
Q

Info is available to users in time to be capable of influencing their decisions

A

Timeliness

38
Q

The cost constraint

A

Benefit greater than cost

39
Q

Economic activity can be accounted for when considering an identifiable set of activities

A

Entity assumption

40
Q

It’s presumed that the entity will continue to operate in the foreseeable future

A

Going concern assumption

41
Q

It is assumed that money is the appropriate basis by with to measure economic activity

A

Monetary unit assumption

42
Q

Economic activity can be divided into meaningful time periods

A

Periodicity assumption

43
Q

Revenue recognition principle

A

Revenue should be recognized when it’s earned and realized or reliable

44
Q

What does it mean to accrue?

A

Record revenue expense without the exchange of cash

45
Q

Revenues are recognized when they are…

A

Earned

46
Q

Expenses are recognized in the…

A

Same period as the related revenue

47
Q

Important to give user info that can make a difference in decision making but not TOO much info

A

Full disclosure principle

48
Q

Conservatism principle

A

Lease likely to overstate assets and understate liabilities

49
Q

What are the IFRS framework assumptions? (2)

A

1 Accrual basis accounting 2 Going concern

50
Q

Elements (framework) of a financial Statement (mnemonic)

A

REGL ALE needs ID

51
Q

Comprehensive income=

A

Net income + OCI

52
Q

What are the Fundamental Qualitative Characteristics?

A

Relevance and Faithful Representation

53
Q

Financial info is relevant if it’s…

A

Capable of making a difference in the decisions made by users

54
Q

Relevance mnemonic

A

Passing confirms money

55
Q

Predictive value definition

A

Can be used by users to predict future outcomes

56
Q

Confirming value

A

Provided feedback about evaluations previously made by users

57
Q

Materiality

A

Info is material if an omission or misstatement can affect the decisions made by users

58
Q

Faithful Representation (mnemonic)

A

Completely Neutral is Free from Error

59
Q

Completeness

A

Financial info includes all necessary info for the user to understand the reported economic results

60
Q

Who issues U.S. GAAP?

A

FASB

61
Q

Who issues IFRS?

A

IASB

62
Q

FASB created a conceptual framework that serves as a…

A

Basis for all FASB pronouncements

63
Q

When the FASB and IASB joint project is complete they will share….

A

A single conceptual framework for financial reporting

64
Q

What is the objective of general purpose financial reporting?

A

Disclose the entity’s performance

65
Q

Increases in equity from peripheral transactions and other events except expenses and distribution to owners

A

Losses

66
Q

Probable future economic benefits to be received by a company as a result of past transactions or events

A

Assets

67
Q

________ may be used to show reductions to or increases in an asset that reflect adjustments beyond the historical cost or carrying amount of an asset

A

Valuation accounts

68
Q

Equity (of net assets)

A

Residual interest in the assets after subtracting liabilities

69
Q

IFRS vs. GAAP framework for the preparation of financial statements difference

A

“IFRS includes:

  • Assets/Liabilities
  • Revenue/expenses
  • Gains/losses
  • Capital maintenance adjustments”
70
Q

What are capital maintenance adjustments?

A

Increases and decreases in equity from the revaluation or restatement of assets and liabilities

71
Q

5 elements of present value measurement

A 
"1 Estimated future cash flows
2 Expectations abt timing variations of future cash flows
3 Time value of money
4 The price for bearing uncertainty
5 Other factors"
72
Q

What 2 approaches are allowed to be used to determine the present value?

A

Traditional approach and expected cash flow approach

73
Q

Traditional approach of present value computations

A

Used when assets or liabilities have fixed cash flows that are not expected to vary

74
Q

Elements of present value measurement identified by the mnemonic

A

UVOTE

75
Q

UVOTE

A

“U The Price for Bearing Uncertainty.
V Expectations about Timing Variations of Future Cash Flows.
O Other Factors (e.g. Liquidity Issues and Market Imperfections).
T Time Value of Money (the Risk-free Rate of Interest).
E Estimate of Future Cash Flow.”

76
Q

Which characteristic enhances information that is BOTH relevant and faithfully represented?

A

Timeliness

77
Q

Replacement cost is defined as the…

A

amount of cash or its equivalent that would be paid to acquire or replace an asset currently.

78
Q

Replacement cost is an…

A

acquisition cost.

79
Q

Who are the primary users of financial reports?

A

External users

80
Q

The qualitative characteristics of useful financial info are likely to help users?

A

Make decisions about the entity based on financial information

FAR (19 decks)

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