Financial Reporting Environmemt Flashcards Preview

FAR > Financial Reporting Environmemt > Flashcards

Flashcards in Financial Reporting Environmemt Deck (32):
1

Who Establishes GAAP

FASB

2

Who enforces the Law

SEC

3

Who establishes Federal Accounting Principles ?

FASAB

Federal Accounting Standard Advisory Board

4

Government Accounting Standard Board

2 Inherent Control Charateristics

The use of Fund Accounting

The implication of a budget as the expression of policy decisions and legally binding control tool

5

Principle of Accountability with Government Reporting

Current year revenues should be sufficient to

6

Assumptions

Economic - entity assumption
Going concern assumption
Monetary unit assumption
Peroidicity assumption

7

FAF

Finicial Accounting Foundation

Appoints board members and advisory councils, ensures funding and exercises oversight

8

FASAC

Financial Accounting Standards Advisory Council

This group advises the FASB in current and possible new agenda items, and helps with formation of task forces for certain issues

9

EITF

Provides implementation guidance within GAAP

EITF created by FASB

10

FASB

7 members

Improve the accounting standards

11

Standards Settings Process

An item get added to the agenda

Second conduct research and issues a discussion memorandum

Hold public meetings

Evaluate research and comments from interested parties and then issue a Exposure draft.

Solicit addiontinal comments

Finialize the new standard by vote. Need a majority vote from the FASB members

12

IASB

International Accounting Standard Board.

Uniform accountjng standards globally. Benefit is less cost

No need to rewrite the financial statement.

13

IFRS

International Financial Reporting Standard

Principles Based

14

SEC

Formed by congress in the 1933 Act

SEC had enforcement authority

SEC delegated authority to GAAP to the FASB

15

Two Types of GAAP

Authoritative

- FASB Accounting Standard of Codification
- SEC guidance is considered authoritative

Non Authoritative
- FASB concepts

16

SEC Regulations

Regulation S-X applies to the reporting interim and annual financial statements including notes and schedules

Regulation S-K provides disclosures, including many that are non-financial.
Regulation S-K also covers certain aspects of corporate annual reports to shareholders.

Regulation S-B applies to small business issuers and non accelerated filters. This disclosure requirements for smaller companies that file periodic reports and registration statements with the SEC have been reduced.

17

10-Q

Interim financial statements must be reviewed by an independent accountant if it is not audited.

Also required ate chnages to the 1/4,
- legal proceedings
- increases, decreases ir changes in securitas or indebtness
- matters submitted to shareholders
- exhibits and reports on Form 8-K
- other material events not reported on form 8-K
Anticipted of new accounting standard

18

10-K

Annual Report

Certified by an independent accountant and signed by the following
- Principal E

19

Basic Information Package

Standardized Financial Statement

Selected financial information in columnar with preceding 5 years financial trends.

Managements discussion and analysis

Dividens and market prices of common stock

Description of business

Locations and descriptions of physical properties

Management

Security holding of directors and officers holding more than 5%

Matters submitted to shareholders for approval

Description of certain business relationships such as those with related parties.

20

8-K

Is a current report to disclose any material events

-a change in control
- acquisition or disposition of a significant amount of assets not in the ordinary course of business
- bankruptcy or receivership
- resignation of directors
- change in the registrants certifying accountant

21

Expected Cash Flow Method Overview

- Measurements at initial recognition
- Fresh-Start measurements and
- Applications of the interest method of allocation



22

Cash Flow information - Objective

The objective is to estimate Fair Value by distinguishing the economic differences between sets of future cash flows often that may vary in time and uncertainty

23

Cash flow information -Elements

Estimates of future Cash flows
Expected variability of their amount and timing
The time value of money

24

Calculation of an asset using present value method

1.) The discount peroid( product life cycle)
2.)

25

Not for profit entities

Transactions

26

Economic Entity Assumption

The reporting(accounting) entity is seperately identified for the purpose of economic and accountability.
Owners and managers economic affairs are segregated from those of the reporting entity

27

Going Concern Assumption

Unless evidence indicates otherwise every business is assumed to be a going concern that operates indefinitely. It is assumed the entity will not be liquidated in the near future.

28

Monetary Unit Measurement

Accounting records are stated in the units of money. The changing purchasing power of the monetary unit is assumed not to be material.

29

Periodicity Assimption

Economic activity can be divided into time periods.

30

Revenue Recognition

Revenue is recognized in the peroid it is earned.

31

Full disclosure principles

Financial ststaments should record anything and all information that could influence investors and creditors.

32

Conservatism Constraint

When in doubt for what type of accounting method to be used use the less favorable accounting method