F-1Concepts Flashcards
(83 cards)
1
Q
Since 1934 who have determine GAAP?-SCAF
A
SEC
CAP
APB
FASB
2
Q
What mean SEC?
A
Security and Exchange Commission
3
Q
What mean APB?
A
Accounting Principle Board
4
Q
What mean CAP?
A
Committee on Accounting Procedure
5
Q
Who was establish SEC and What Establish?
A
- Was establish by Securities and Exchange Act of 1934
- SEC has all reporting requirement for any company listed in US exchange
- All companies that issue securities must be follow SEC rules and regulations
6
Q
What happened on July 1 2009?
A
The FASB “Accounting Standard Codification” summarize in a single source of authoritative non-governmental GAAP.
7
Q
Authoritative Standard Setters include in the codification? FEDPRIA
A
Financial Accounting Standard Board Emerging Issue Task Force Derivative P- Accounting Principle Board Opinion R- Accounting Research Bulletin I- Accounting Interpretation A- American Institute of Certified Public Accountant
8
Q
Literature that include FASB? SITSSS
A
S- Statement of Financial Accounting Standards
I- Interpretations
T- Technical Bulletin
S- Staff Position
S- Staff Implementation Guides
S- Statement of Financial Accounting Concepts
9
Q
Literature that include AICPA? SAPT
A
S-Statement of Position
A- Auditing and Accounting Guides
P- Practice Bulletin
T-Technical Inquiry Service
10
Q
To increase the usefulness of the codification for public companies the SEC include in codification: (Authoritative Pronouncement)
A
- Regulation S-X Regulation
- Financial Reporting Releases for (FRR)
- Accounting Series Releases Accounting (ASR)
- Interpretative Releases I (IR)
- Staff Accounting Bulletin S (SAB)
- EITF Emerging
11
Q
What is FAF and What create?
A
- Is Financial Accounting Foundation
- Create the PCC - Private Company Council
12
Q
What is the goal of the PCC?
A
- the goal is to establish alternative GAAP to make the private financial statement:
- More Relevant
- Cost-Beneficial
- Less Complex
13
Q
What is an ASU, what provide and to what is serve?
A
- Accounting Standard Update
- Provide background information
- Update the codification
- Describe why is for the update
- Serve to update the Accounting Standard Codification (ASC)
14
Q
What is the IASB and when was establish?
A
- International Accounting Standard Board
- Was establish on 2001 as part of the International Financial Accounting Standard Foundation
15
Q
What is the purpose of the IASB?
A
-the purpose is to develop a single set of high qualitative global standards of accounting.
16
Q
IFRS Foundation is Sponsor of?
A
- IASB (International Accounting Standard Board)
- IFRIC (International Financial Reporting Committee)
17
Q
What do IFRIC?
A
- help IASB in establish and improve financial accounting and reporting
- assist IASB for international convergence
- provide guidance for new identified reporting issues
18
Q
What is IFRS and what include?
A
-International Financial Reporting Standards
-Include:
= International Accounting Standars
= InternationalFinancial Reporting Standards
= Interpretations
19
Q
What it call the FASB Conceptual Framework
A
Statement of Financial Accounting Concepts
20
Q
What is the name of SFAC No. 8 and the chapter 1 & 3?
A
- Conceptual Framework for Financial Reporting
- Chapter 1- Objective of General Purpose Financial Reporting
- Chapter 3- Qualitative Characteristics of Useful Information
21
Q
What is the objective of general purpose financial reporting?
A
- is to provide financial information of the reporting entity to primary users that is useful to make decision about how many resources provide to the reporting entity.
22
Q
What are the primary users?
A
- External Users:
- Existing and Potential:
- Investors
- Lenders
- Other Creditors
23
Q
What reflects this financial reporting?
A
- Entity resources
- Claims against the entity
- management and governing board performance
24
Q
Fundamental Qualitative Characteristics?
A
- Relevance
- Faithful Representation
25
What Relevance Means?
Means that the financial information is relevant when it capable to change the decision of the primary users.
26
What mean faithful representation?
That the reporting entity must faithfully represent the economic phenomena.
27
To the information be relevance, what are the characteristics to have?
- Predictive Value
- Confirming Value
- Materiality
28
What is predictive value?
The information has predictive value when the user can predict the future outcomes.
29
What is confirming value?
The information has confirming value when it provides feedback about the evaluation previously made by users.
30
What is Materiality?
the information is material when the omission or misstatement could affect the decision made by users.
31
What characteristics require faithful representation?
- Completeness
- Neutrality
- Free from Error
32
What mean completeness?
-when the financial information include all information necessary that the user can use to understand the economic phenomena. This include the financial statements and its notes.
33
What mean neutrality?
-When the financial information is free from bias in selection or representation.
34
What mean free from error?
-When the process of selection or application to creating financial statements have no errors or omissions in the description of economic phenomena.
35
Steps to apply fundamental qualitative characteristics
- identify the phenomena
- identify the type of information that is relevant
- -determine whether the information is available and can be faithfully represented.
36
What is an enhancing characteristic?
- enhance the usefulness of information that is relevant and faithfully represented.
- are used to know how a phenomena is represented
37
Which are the enhancing characteristics?
- Comparability
- Verifiability
- Timeliness
- Understandability
38
What mean Comparability?
-the information is more useful when the user can compare same information but similar reporting entities in the same or other periods.
39
Which characteristic helps to achieve comparability?
-Consistency- because is refer to use same method through the time for the same items
40
What mean verifiability?
-To the information be more useful we need someone that must be independent to verify the information, to verify the consistency to compare it with other entity information.
41
What mean timeliness?
-Means that the information is available in time so the users can be capable to made the correct decision.
42
What mean understandability?
-the information is understandable if it is clearly presented, well classified, characterized and concisely.
43
Which is the Principal Constraint for achieve that the information have all the characteristics?
- Cost
- Because the benefits of presented financial reporting must be greater than the cost of obtaining and presenting that information.
44
What Concepts were replace by SFAC 8?
- SFAC 1- Objective of Financial Reporting by Business Enterprise
- SFAC 2 - Qualitative Characteristics of financial reporting
45
SFAC 6 replace?
SFAC 3- Elements of financial statements of a business
46
What is the SFAC No. 4?
- Objective of Financial Reporting of Nonbusiness organizations.
- Present the distinguish characteristics between business and nonbusiness.
47
Characteristics of nonbusiness organization?
- Their resources come from contributions and grants
- Do not provide goods and services for profit
- Do not transfer or redeemed the ownership because it not exist.
48
Users of financial Information of Nonbusiness Organizations? 4 groups
- Resources Providers such as lenders, suppliers, employees, members, contributors, taxpayers
- The people who is benefit from the services provided
- Governing and Oversight bodies
- Manager
49
Objectives of Financial Reporting of Nonbusiness Organization?
- improve the Allocation of resources
- Evaluate the services and the ability to provide services
- Evaluate the performance and stewardship of the manager.
- Information about liquidity, resources, obligation, inflows and outflows.
50
SFAC NO. 5?
- Recognition and Measurement in the Financial Statements.
| - provide guidance on what and when the information should be incorporate in the financial statements.
51
What mean recognition?
-Is the process of recording an item in the financial statement and classifying it as asset, liability, equity, revenue, or expense.
52
Which are the Measurement Attributes for Assets and Liabilities?
- Historical Cost- PP&E
- Current Cost- Inventory
- Net Realizable Value- A/R
- Current Market Value- Marketable Securities
- Present Value - Long-Term Debt (Bonds)
53
Fundamental Assumptions?
- Entity Assumption
- Going Concern Assumption
- Monetary Unit Assumption
- Periodicity Assumption
- Historical Cost Principle
- Revenue Recognition Principle
- Matching Principle
- Accrual Accounting
- Full Disclosure
- Conservatism Principle
54
What mean entity assumption?
-Company is a separate entity from the owner.
55
What mean Going Concern Assumption?
-The company is continuing the operations infinite
56
What mean Monetary unit assumption?
- That all the financial information will be on a single currency.
- Everything is measure as money
57
What mean periodicity assumption?
- that the financial information will be report quarterly, semiannually, or annually.
- The time will be divided in periods.
58
What is Historical Principle?
Financial information will be accounted for and based on cost not current market value.
59
What is revenue recognition?
Revenue should recognize when it earned, realize or realizable not when it receive.
60
What is Matching Principle?
- When the expenses are matched against that revenue.
| - Expenses incurred to generate a revenue.
61
What is accrual accounting?
- revenues are recognize when they are earned and expenses are recognize in the same period of related revenue.
- Might record the revenue or expense without the exchange of cash.
62
What mean Full Disclosure principle?
- give user all necessary information so they can make a decision.
- Example- footnotes on F/S . The footnotes are part of completeness requirements because explain the user the basis of why is that recording of that way.
63
What mean conservatism principle?
- Recognize revenues/Gains when the processing earned is complete and expenses/loss immediately.
- Method that not overstate the assets and understate the liabilities.
64
SFAC No. 6?
Elements of Financial Statements
65
What is an element of financial statements?
-They are the components of financial statements. And should be measure and recognize following the SFAC No. 5.
66
Which are the elements?
- Revenue
- Expense
- Gain
- Losses
- Asset
- Liability
- Equity
- Investment by owners
- Distribution to Owners
67
What is comprehensive income?
Net Income minus other comprehensive income (transaction with owners except Investment and distribution by owners)
68
Element Revenue?
- Revenues are inflows that compound the core of the business.
- Serve to enhance the asset or reduct the liabilities.
69
Element Expense?
-Are outflows that compound the core of the business that include uses of assets(depreciation), insurance of liabilities from delivering goods or services.
70
Element Gains?
Are increases in Equity that is not part of the normal business operation
71
Element Loss?
Are decrease in Equity that is not part of the normal operation. Example Impairments and Write-Off
72
Element Asset?
are probable future economic benefits to be receive by the company as result of past operation.
73
Element Liability?
are probable future sacrifices of economic benefits arising for a present transaction to transfer asset or provide services to other entities in the future as result of past transaction.
74
Element Equity?
Residual interest of the company that remains after deducting its liabilities
75
Element Investment by owners?
Increase in assets from transfer cash, property, or services to the company.
76
Element Distribution to owners?
Decrease in assets from transfer cash, property, or services the owners
77
SFAC No. 7?
Using Cash Flow Information and Present Value in Accounting
78
For what is used SFAC 7? what provide?
- provide a framework to when employ the future cash flow as measurement.
- Also provide a set of use for present value when the timing or amount of cash flow are uncertain.
79
Five elements of PV? EETPO
- Estimate future cash flows
- Expectations about timing variations of future cash flows
- tima value money
- price bearing for uncertainty
- Other Factors- liquidity issues or market imperfections
80
Two approaches for PV?
- Traditional Approach
| - Expected Cash flow Approach
81
What is the traditional approach?
-Is focus on interest. This approach when the interest is fixed or the cash flow are not expect to vary.
82
What is the Expected future cash flow approach?
-Not focus on interest rate , focus on risk-free rate of return as the discount rate taking in counts the uncertainty.
83
According to the IASB, what is an underlying assumption of financial statement preparation and presentation?
Going Concern Assumption
