F1 - Conceptual Frameworks Flashcards
Name the single source of authoritative nongovernmental U.S. GAAP.
The FASB “Accounting Standards Codificaion” (ASC).
The term “International Financial Reporting Standards” includes what standards?
- International Accounting Standards (IAS)
- International Financial Reporting Standards (IFRS)
- FRIC Interpretations
- SIC Interpretations
Who are the primary users of general purpose financial reports?
Existing and potential:
- Investors
- Lenders
- Other Creditors
Name the pervasive constraint on the information provided in financial reporting.
Cost Constraint:
The benefits of reporting financial information must be greater than the costs of obtaining and presenting the information.
Name the fundamental qualitative characteristics of useful financial information.
Relevance and Faithful Representation
Name the three elements of relevance.
- Predictive Value
- Confirming Value
- Materiality
Name the three elements of faithful representation.
- Neutrality
- Completeness
- Freedom from error
Name the enhancing qualitative characteristics of financial information.
Comparability, Verifiability, Timeliness, and Understandability
According to SFAC #5, what should a full set of financial statements include?
- Statement of Financial Position (the balance sheet)
- Statement of Earnings (the income statement)
- Statement of Comprehensive Income
- Statement of Cash Flows
- Statement of Changes in Owners’ Equity
What is the difference between realization and recognition?
- Realization*: When sold and converted to cash (or claims to cash)
- Recognition*: When recorded in the financial statements.
List the 10 elements of financial statements according to SFAC #6.
CREG and LALEID
Comprehensive Income
Revenues
Expenses
Gains
and
Losses
Assets
Liabilities
Equity (of Net Assets)
Investments by Owners
Distributions to Owners
List the six elements of financial statements according to the IASB Framework.
Assets
Liabilities
Equity
Income (revenues and gains)
Expenses (expenses and losses)
Capital maintenance adjustments
Name the five elements of present value measurement per SFAC #7.
EVTUO
Estimate of future cash flow
Expectations about timing Variations of future cash flows
Time value of money (the risk-free rate of interest)
The price for bearing Uncertainty
Other factors (e.g., liquidity issues and market imperfections).
Describe the expected cash flow approach for present value computations.
Considers a range of possible cash flows and assigns a (subjective) probability to each cash flow in the range to determine the weighted-average, or “expected”, future cash flow.
