FAR Section 1.1 Flashcards
(25 cards)
In order for a item to qualify for recognition in the financial statements, what must the item have according to GAAP?
It should meet the definition of an element of financial statements, be measurable with reliability, relevant to users, based on information that is faithful, verifiable, and neutral. It does not need to meet expectations of investors, element may be an element of the balance sheet or income statement
What is the most authoritative accounting pronouncement?
FASB Statements of Financial Accounting Standards
What is included in comprehensive income?
All changes to equity other than owner related items
What must financial information have in order to have faithful representation?
Roger is never over the F-ENC
Error (free from error)
Neutral
Completeness
What are the objectives to financial reporting?
To:
- Provide information that is useful to investors and creditors
- Provide information about entity resources and claims against them
- Report changes in entity’s economic resources and claims
Where should the basis of consolidation be disclosed in the annual report?
Summary of significant accounting polices
According to the FASB conceptual framework, usefulness in providing informations in financial statements is subject to what constraint?
Cost/Benefit
What is the criteria for recognizing an element of financial reporting under IFRS?
The probability of occurrence and reasonable measurement.
What is the criteria for recognizing an element of financial reporting under GAAP?
It must conform to the definition of an element of financial reporting, item that can be measured in monetary terms, item is relevant and faithfully represented
What are the three levels in terms of reporting at fair value?
Level 1- Most reliable; unadjusted quoted market prices for identical assets or liabilities in actives markets
Level 2- Quoted prices for similar assets or liabilities in active markets
Level 3- Inputs based on the reporting entity’s internal data
What is the criteria for recognizing an element of financial reporting under IFRS?
Elements must be probable and reliable/
How is managerial accounting different from financial accounting?
It is designed to provide information to internal users, it may consist of a variety of reports that are designed to provide managers with information that will enable them to make appropriate decisions related to the operations of the entity. As a result, they may be prepared using whatever format, accounting approach, or guidelines that are most useful to internal users of the financial information. Since financial accounting is designed to provide information to external users, it must follow guidelines that are not specific to the entity but are, instead, generally understandable. As a result, financial reporting will apply a financial reporting framework, such as GAAP.
In order to meet disclosures related to risks and uncertainties, what should the entity disclose?
The use of estimates and the concentrations of risk.
What are the appropriate methods for recognizing expenses?
Casey’s donuts Smell irRessitable and must be eaten Immediately
Cause and effect
systematic and rational allocation
immediate recognition
What consists of relevance in the conceptual framework?
- Predictive value
- Confrimatory value
-under the constraint of cost/benefit (going concern under IFRS)
What are the fair value valuation techniques?
Roger likes to sing in the MIC
- Market Approach
- Income Approach
- Cost Approach
To meet the disclosure requirements related to risks and uncertainties, what will an entity disclose?
The use of estimates and concentrations of risk
The University of Wisconsin is a publicly held university. What accounting body should it follow?
GASB
Which of the following disclosures should prospective financial statements include?
significant accounting policies and summary of significant assumptions
What is the purpose of SFAC (Statement of Financial Accounting Concept) 4?
To provide a basis for establishing detailed accounting and reporting standards for nonbusiness entities
How can forfeited nonvested accounts of an employee benefit plan be used?
To reduce future employer contributions, for expenses, to be reallocated to participant’s accounts
Where is accumulated other comprehensive income be reported in?
The stockholders’ equity section of the balance sheet
What is the basic accounting principle that states that an entity is assumed to have a life that is indefinite?
continuity
Where would the collection of proceeds from a note payable be reported in the statement of cash flows?
Investing activities
