My own notes

Question 1

Recognition

Answer 1

Process of reporting an item on the financial statements

Question 2

Allocation

Answer 2

Process of spreading costs over more than 1 period.

Question 3

Realization

Answer 3

Conversion of item or service for cash or claim to cash.

Question 4

Matching

Answer 4

Process of recognizing an expense in same period a related benefit is recognized.

Question 5

5 elements that make up the Financial Statements?

Answer 5

Asset, Liability, Equity, Income, Expense

Question 6

3 approaches to measure fair value-MIC

Answer 6

Market, Income, Cost approach

Question 7

Financial capital maintenance concepts

Answer 7

increased or decreased when assets are disposed of or liabilities are settled. (net income)

Question 8

Physical capital maintenance concepts

Answer 8

Gains & Losses are disposed of or liabilities are settled-Generally used to calculate net income. (comprehensive income)

Question 9

4 pronouncements-level of authority

Answer 9

1. FASB statements of financial accounting standards
2. FASB interpretations
3. AICPA accounting principles board opinions
4. AICPA accounting research bulletins

Question 10

Required-Disclouores for risks and uncertainties

Answer 10

Nature of operations, use of estimates, certain significant estimates, vulnerability to certain concentration of risks.

Question 11

Methods for recognizing expenses

Answer 11

cause & effect,immediate recognition, systematic and rational allocation.

Question 12

What are trading securities

Answer 12

Investments in equity instruments:stocks, options right warrants and debt instruments: bonds

Question 13

What is a hedge designed to do?

Answer 13

Mitigate or eliminate risk associated with exposure to changes in fair value of a recognized asset or liability or firm commitment: fair value hedge.

Question 14

Who is the statement of functional expense required for.

Answer 14

Voluntary health and welfare organizations.

It is optional for other non-for profit organizations

Question 15

Serial and Debenture Bonds

Answer 15

Serial Bonds = Require periodic principal payments

Debenture Bonds = Unsesecured

Question 16

Derivative

Answer 16

Must have @least 1 underlying, 1 notional amount, allow for net settlement, and require no net initial investment.

Question 17

NFP financing activities

Answer 17

Permanently restricted contributions, contributions restricted for long term purposes.

Question 18

How to calculate earnings per share:

Answer 18

(net income - preferred stock dividends / weighted average common stock outstanding.