FAR1

Question 1

SEC

Answer 1

Legal authority to establish U.S. GAAP (established in 1934)

Question 2

Committee on Accounting Procedure (CAP)

Answer 2

Part time committee of the AICPA: 1939 - 1959

Question 3

Accounting Principles Board (APB)

Answer 3

Part time committee of the AICPA: 1959 - 1973

Question 4

Financial Accounting Standards Board (FASB)

Answer 4

Independent full time organization to determine GAAP: 1973 - present

Question 5

FASB Codification

Answer 5

Effective July 1, 2009, the FASB Accounting Standards Codification became the single source of “authoritative” nongovernmental U.S. GAAP

Question 6

Private Company Council (PCC)

Answer 6

The goal of the PCC is to establish alternatives to U.S. GAAP, where appropriate, to make private company financial statements more relevant, less complex, and cost-beneficial.

Question 7

Accounting Standards Updates

Answer 7

FASB’s updates to the codification

Question 8

IASB and FASB Convergence

Answer 8

Single set of high-quality, international accounting standards that companies could use for both domestic and cross-border financial reporting. (eliminate the differences between two sets) NOT HAPPENING

Question 9

Conceptual Framework (U.S.)

Answer 9

Basis for all FASB pronouncements - basic reasoning (based on rules)

Question 10

Fundamental Qualitative Characteristics

Answer 10

Relevance and Faithful

Question 11

Relevance

Answer 11

PCM (passing confirms money)

Predictive Value, Confirming Value, Materiality

Question 12

Faithful Representation

Answer 12

Completeness (primary FS and notes), neutrality, and freedom from error: reliable

Question 13

Enhancing Qualitative Characteristics

Answer 13

Compare and verify in time to understand (comparability = consistency):
Timeliness, understandability, comparability and verifiability

Question 14

Cost Constraint

Answer 14

Benefit > Cost

Question 15

Measurement Attributes for Assets and Liabilities

Answer 15

Historical Cost - PP+E
Current Cost - Inventory
Net realizable Value - A/R
Current market Value - Marketable Securities
Present Value of future cash flows - LT Debt “bonds”

Question 16

Revenue Recognition Principle

Answer 16

Revenue should be recognized when it is “earned” and when it is “realized (already paid) or realizable (to accrual for)”

Question 17

Conservatism Principle

Answer 17

Revenues/gains when complete “wait”

Expenses/loss recognize “now”

Question 18

5 Elements of Present Value Measurement

Answer 18

1. Estimate of future cash flow
2. Timing variations of future cash flows
3. Time value of money (risk-free rate)
4. Uncertainty (credit risk)
5. Other factors (liquidity issues and market imperfections)

Question 19

Income Statement

Answer 19

Useful in determining profitability, value for investment purposes, and credit worthiness (for period of time)

Question 20

Discontinued operations

Answer 20

Has been disposed of and/(or) is classified as held for sale

represents strategic shift/major effect on operations

Question 21

Strategic shift/major effect on operations

Answer 21

Disposal of a major geographical area, equity method investment, or line of business (GEL)

Question 22

Subsequent Increases in Fair Value

Answer 22

A gain is recognized for any subsequent increase in fair value minus the costs to sell (but not in excess of the previously recognized cumulative loss)

Question 23

Changes in Accounting Estimate

Answer 23

Prospective - affects current and future income from continuing operations

Question 24

Changes in Accounting Principle

Answer 24

Retro: Non-comparative vs. Comparative
Non-comparative: restate B. RE in period of change
Comparative: restate B. RE in first period presented

Question 25

Exception to General Rule from Change in Accounting Principle

Answer 25

Change to LIFO and Change in Depreciation method = prospective (like a change in estimate)

Question 26

Changes in Accounting Entity

Answer 26

Restate - from earliest period presented (error correction). If presented = correct the data, If NOT presented = B. RE of earliest year presented

Question 27

Comprehensive Income

Answer 27

Net Income + Other Comprehensive Income (OCI)

Question 28

PUFE(R) or PUFE likes to Revalue his income

Answer 28

``` Pension adjustments Unrealized gains and losses (available-for-sale securities) Foreign currency items Effective portion cash flow hedges Revaluation surplus (IFRS only) ```

Question 29

Changes in AOCI

Answer 29

Beginning Balance OCI (current year) - Amounts reclassified (to account for double counting) = Net current-period OCI Beg. Balance + Net current = Ending Balance

Question 30

Going Concern

Answer 30

Reasonable period not to exceed one year beyond F.S. date both quantitative and qualitative (interim too)

Question 31

Interim Financial Reporting

Answer 31

Timeliness over Reliability (unaudited), integral part of annual F.S.

Question 32

Interim Income Taxes

Answer 32

Multiply the year-to-date income by the estimated effective tax rate and subtract the result from the provision included in the previous quarter

Question 33

Quantitative Thresholds for Reportable Segments

Answer 33

10% "Size" Test (internal and external) | Revenue, Profit/Loss, Assets

Question 34

75% "Reporting Sufficiency" Test

Answer 34

At least 75% of external (consolidated) revenue is included in reportable segments

Question 35

Form 10-K

Answer 35

Filed annually by U.S. registered companies (issuers) (audited) 60 days = large accelerated filers, 75 days = accelerated filers, 90 days = all other registrants

Question 36

Form 10-Q

Answer 36

Filed quarterly by U.S. registered companies (issuers) (unaudited) 40 days = (large) accelerated filers, 45 days = all other registrants

Question 37

Form 11-K

Answer 37

Annual report of a company's employee benefit plan(s).

Question 38

Forms 20-F and 40-F

Answer 38

Filed annually by foreign private issuers

Question 39

Form 6-K

Answer 39

Filed semi-annually by foreign private issuers

Question 40

Form 8-K

Answer 40

Filed to report major corporate events/significant events

Question 41

Forms 3, 4, and 5

Answer 41

Filed by directors, officers, or beneficial owners of more than 10% of a class of equity securities of a registered company (does not have XBRL/XML)

Question 42

Regulation S-X

Answer 42

SEC sets forth the "form and content" of and requirements for interim and annual f.s. to be filed with the SEC Interim - unaudited (U.S. - Q)(Foreign - Semi) Annual - audited (B.S. 2 yrs, I.S./C.F. 3 yrs)