F1M1 Flashcards
SEC
legal authority to establish GAAP; however, tends to allow profession to self-regulate
FASB Codification
single source of authoritative literature nongovernmental GAAP; practices not included in codification are not GAAP
PCC
Private Company Council; standard for privately held companies; establish alternatives to GAAP where appropriate
Accounting Standards Update
Method in which FASB updates the Codification for new US GAAP; NOT AUTHORITATIVE LITERATURE, instead provide background info
Primary Users
External; existing and potential investors, lenders, and creditors
Qualitative Characteristics
likely to be most useful in making decisions about reporting entity based on financial information
Fundamental Qualitative Characteristics
Relevance and Faithful Representation
Relevance
PCM; Predictive Value, Confirmatory Value, Materiality
Predictive Value
information has predictive value if it can be used by users to predict future outcomes
Conformity Value
information has confirmatory value if it provides feedback about evaluation previously made by users
Materiality
if it could affect the decisions made by users
Faithful Representation
Complete, Neutral, Free from error
Complete
includes all information necessary for the user to understand the reported economic event, including descriptions and explanations
Neutral
free from bias in selection or presentation
Free from error
Free from MATERIAL error; does not include accuracy
Enhancing Qualitative Characteristics
Comparability, Verifiability, Timeliness, and Understandability
Cost Constraint
Benefits outweigh the costs
Characteristics of Nonbusiness Organizations
significant portion of their resources come from contributions and grants
their operating purposes are ‘other than’ to provide goods or services for a profit
they lack ownership interest that can be sold
Users of Nonbusiness Organizations
resource providers, constituents, governing and oversight bodies, managers
Objectives of nonbusiness organizations
resource allocation decisions, assessing services and ability to provide services, assessing management stewardship and performance
Full set of financial statments
- Statement of financial positions (balance sheet)
- Statement of earnings (income statement)
- Statement of comprehensive income
- Statement of cash flows
- Statement of changes in owners equity
Balance Sheet
Statement of financial position; financial risk
Income Statement
Statement of earnings; performance and operating risk
Fundamental Recognition Criteria
Definition, measurability, relevance, and reliability
