CPA Study Cards ! F1 page 3 - 16

  1. In the United States the-------------------------------------has the Legal authory to establish U.S. generally accepted accounting principles.
    Securities and Exchange Commission ( SEC)
  2. While the SEC has the legal authory to establish U.S. GAAP it has allowed the -------------------------------to establish GAAP and ------------------------.
    accounting profession/self-regulate
  3. The ----------------was established by the Secutities Exchange Act of 1934
  4. All companies that issue securities in the United States are subject to ------------rules and regulations.
  5. The SEC issues 5 releases and reports.
    Financial Reporting Releases (FRR)

    Accounting Series Releases (ASR)

    Interpretative Releases (IR)

    Staff Accounting Bulletins (SAB)

    SEC Observer Comments       
  6. SEC stands for?
    Securities and Exchange Comission
  7. FRR stands for?
    Financial Reporting Releases
  8. ASR stands for?
    Accounting Series Releases.
  9. IR stands for?
    Interpretative Releases
  10. SAB stands for?
    Staff Accounting Bulletins
  11. FASB stands for?
    Financial Accounting Standards Board
  12. A independent full-time organization called the  ------------------------------------------was established to determine GAAP
    Financial Accounting Standards Board
  13. FASB issues the following
    Statements of Financial Accounting Standards (SFAS)

    FASB Interpretations (FIN)

    FASB Technical Bulletins (FTB)

    Emerging Issues Task Force Statements (EITF)

    FASB Staff Positions

    FASB Implementation Guides

    Statements of Financial Accounting Concepts (SFAC)           
  14. SFAS stands for?
    Statements of Financial Accounting Standards
  15. FIN stands for?
    FASB Interpretations
  16. FTB stands for?
    FASB Technical Bulletins
  17. EITF stands for?
    Emerging Issues Task Faorce Statements
  18. SFAC stands for?
    Statements of Financial Accounting Concepts
  19. The FASB has ------------ full time members who serve for -------- year terms and may be reappointed to ------------additional term(s).  The Board members must --------------------------------------------------------before joining the Board.
    7 / 5/ 1/ sever connections with firms or institutions
  20. The -----------------------------------------------------------is the single source of authoritative nongovermental U.S. GAAP. 
    FASB Accounting STandards Codification
  21. Accounting and financial reporting practices not included in the --------------------------------------------are not GAAP
    FASB Accounting STandards Codification
  22. AICPA Stands for?
    American Institute of Certified Public Accountants
  23. ASC stands for?
    Accounting STandards Codification
  24. Proposed FASB Amendments to the ------------ are issued for public comment inthe form of -------------------------.  A ------------------------ of the Board members is repquired to approve an ---------------------------- for issuance.  At the end of the -------------------------------------------------, the FASB staff analyzes and studies all comment letters and position papers and then the Board redeliberates on the issue.   When the Board is satisfied that all reasonable alternatives have been adequately considered , the FASB staff prepares an ---------------------------------------------------------- for Board consideration.   A majority vote of the Board members is required to amend the ---------------------------.
    ASC / Exposure Drafts / majority vote /  Exposure Draft / Exposure Draft public comment period / Accounting Standards Update / ASC
  25. Accounting Standards Updates are------------------------------ but instead provide ------------------------------------- update the Codification and describe the basis for ------------------------------------------------------------in the Codification.
    not authoritative literature / background information / conclusions on changes
  26. IASB stands for?
    International Accounting STandards Board
  27. IFRS stands for?
    International Financial Reporting Standards
  28. What is the purpose of the IASB?
    To develop a single set of high quality global accounting standards
  29. IFRIC stands for?
    International Financial Reporting Interpretations Committee
  30. What does IFRIC do?
    provides guidance on newly identified financial reporting issues not addressed in the IFRSs and assists the IASB in achieving international convergence of accounting standards.
  31. IAS stands for?
    International Accounting STandards
  32. The IASB issues ------------------------------- and related documents.
  33. When the IASB was created it adopted the ---------------------------------.
  34. The IASB generally publishes a --------------------- as its first publication on a major new topic, although ----------------------- are not required.  After receiving and reviewing comments on the -----------------------, the IASB staff prepares an ---------------------------.  The publication of an --------------------------------------for public comment is required.  At least ----------- members of the IASB must approve an -------------------------------------------- for issuance.  At the end of the ------------------------------------public comment period, the IASB analyzes and studies all comment letters and position papers and re-deliberates on the issue.   A IFRS may be issued and must be approved by at least ------------------ members of the IASB.
    Discussion paper / disscussion paper / disscussion paper / Exposure draft / Exposure draft /  9 / Expososure draft / Exposure draft /  9
  35. The IASB is developing the------------------------------------------------------in a joint project with the FASB.  The purpose of the project is to converge and improve the FASB and IASB financial reporting frameworks.
    Conceptual Framework for Finanial Reporting(Conceptual Framework)
  36. Under IFRS entities are directed to refer to and consider the applicabilty of the ---------------------------------------------------------------------- when developing accounting policies in the absence of a standard or interpretation that specifically applies to an item.

    Under U.S. GAAP the ------------------------------------cannot be applied to specific accounting issues.
    Conceptual Framework for Finacial Reporting (Conceptual Framework)
  37. What is the goal of international convergenance of accounting standards?
    a single set of high quality internatinal accounting standards that companies can use for both domestic and cross border fiancial reporting.
  38. The FASB has created a conceptual framework( set forth in pronoucements called ----------------------------) that serves as a basis for all FASB pronuncements.
    Statemetns of Financial Accounting Concepts
  39. The SFAC are not------------------ but they --------------------------------for business and nonbusiness enterprises.
    GAAP / Basis for financial accounting concepts
  40. What is the objective of general purpose financial reporting?
    to provide financial information about the reporting entity that is useful tothe primary users.
  41. Who are the primary users of general purpose financial reporting?
    existing and potential investors, lenders, and other creditors.
  42. Who may use general purpose finacial reporting information but are not considered primary users?
    regulators, members of the public who are not investors, other lenders and creditors.
  43. Information in the general purpose financial reports include the following
    informaiton about resources of the entitiy

    • the claims agianst the entity
    • how efficiently and effectively the entity management and governing board have discharged their responsibilities to use the entrity resources.  
  44. Financial informaitn should be presented using the -------------------------------------------------
    accrual basis of accounting
  45. Existing and potential investors, lenders, and other creditors use financial information to ------------------------------------------------------------------------------------
    assess the reporting entitys prospects for future net cash inflows to the entity.
  46. What are the Qualitative Characteristics of useful financial information?
    Must have relevance and faithful representation
  47. Qualitative characteristics of usefull financial informaiton are characteristics that help users becouse they are useful in --------------------------------------------------------------
    making decisions about the reporting entity based on financial information
  48. In fundamental Qualitative Characteristics, what 2 characteristics must be present for the finacial information to be useful
    Relevance and Faithful representation
  49. For information to be relevant is must be capable of -------------------------
    makeing a differance in the decisions made by users
  50. What 3 characteristics does relevant information have?
    Predictive value

    Confirming Value


  51. When does information have predictive value?
    it can be used to predict future outcomes
  52. When does information have confirming value?
    it provides feedback about evaluations previously made by users.
  53. When is information material?
    if an omission or misstatement of the informaiton could affect the decisions made by users based on finacial informaiton.
  54. What is Faithful Representation?
    information that is complete, neutral, and free from error ( basicly as reliable as possible)
  55. What are the 3 parts of Faithful Representation?


    Free from error 
  56. Is perfect faithful representation acheiveable?
    No, it must be maximized though.
  57. What is Completeness?
    all informaiton neccessary for the user to understand the reported economic phenomena including descriptions and explanations.
  58. What is Neutrality?
    financial informaiton is free from bias
  59. If information can be used to predict future outcomes, it has................
    Predictive Value
  60. If informaiton provides feedback about evaluations previously made by users, it  has ....................
    Confirmaing value
  61. If the omission or misstatement of informaiton could affect the decisions made by users based on financial informaiton, that informaiton is......................
  62. If informaiton has Predictive value, confirming value, and is material than it is ......................
  63. relevant and faithful information are what characteristics?
    Fundamental Qualitative Characteristics
  64. if information is free from error, what does it mean..........
    that there are no errors in the selection or application of the process use to produce reported financial information an that there are no errors or omissions in the descriptions of economic phenomena.
  65. When information has no errors in the slection of application of the process used to produce it and there are no errors or omissions in the descriptions of economic phonomena, what descibes it?
    Freedom from error
  66. What are the steps to apply the Fundamental Qualitative Characteristics?
    1. identify the phonomena that has the potential to be useful tot he users of a reporting entitys finacial informaiton

    2.identify the type of informaiton about the phenomena that would be most relevant

    3. Determine whether the informaiotn is available and can be faithfully represented
  67. List the Enhancing Qualitative Characteristics



  68. What are enhancing Qualitative Characteristics used for?
    used to determine how a phenomena should be depicted if two way are equally releant and faithfully represented
  69. What is comparability
    information is more useful if it can be compared with similar information about other entities or from other time periods.
  70. What is Verifiability
    it means that different knowledgeable and independent observers can reach consersus that a particular depiction is faithfully represented
  71. What is Timeliness
    it means that information is available to users in time to be capable of influencing their decisions
  72. what is understandability
    it means that informaiton is understandable if it is classified, characterized and presented clearly and concisely.
  73. What are comparability , verifiability, timeleness, and understandability
    enhancing qualitative characteristics
  74. What is a cost constraint
    the benefits of reporting financial informaiton must be greater than the costs of obtaining and presenting the information.
  75. If the benefits of reporting financial information are greater than the costs of obtaining and presenting the information, what is this
    a cost constraint
  76. list the characteristics of a nonbusiness organization
    1. a significant portion of their resources come from contributions and grants

    2.  their operating purposes are other then to provide goods or services for profit

    3. they lack ownership interests that can be sold transferred or redeemed or that allow a claim on resources upon liquidation
  77. list the users of nonbusiness organizations financail information
    resource providers(such as suppliers, employees, members, taxpayers,....)  Constituents who use and benefit from the services, governing and oversight bodies, managers
  78. list the full set of financial statements
    1. statement of financial position (balance sheet)

    2. statement of earnings ( the income statement)

    3. staement of comprehensive income

    4. statement of cash flows

    5. statement of changes in owners equity       
  79. what is another name for the Statement of financail position
    the balance sheet
  80. what is another name for the statement of earnings
    the income statement
  81. What are the measurement attributes for assets and liabilities
    1. historical cost

    2. current cost

    3. net realizable cost

    4. current market value

    5. present value of future cash flows       
  82. List the fundamental assumptions of U.S. GAAP
    1. entity assumption

    2. going concern assumption

    3. monetary unit assumption

    4. periodicity assumption

    5. historical cost principle

    6. revenue recognition principle

    7. matching principle

    8. accuarl accounting

    9. full disclosure principle

    10. conservatism principle

  83. What is the entity assumption
    economic activity can be accounted for when considering an identiable set of activities
  84. what is the going concern assumption
    it is presumed that the entity will continue to operate in the foreseeable future
  85. what is the monetary unit assumption
    it is assumed that money is an appropriate basis by which to measure economic activity.  it does not change with the passage of time.
  86. periodicity assumption
    economic activity can be divided into meaningful time periods
  87. historical cost principle
    as a general rule financial informaiton is accounted for and based on cost not current market value
  88. what is the revenue recognition principle
    as a general rule revenue should be recognized when it is earned and when it is realized or realizable
  89. what does earned mean
    when the enity has substantially accomplished what it must do to be entitled to the benefits represented by the revenues
  90. What does realized mean
    revenues and gains are recognized when products merchandise or othter assets are exchanged for cash or claims to cash or when related assets recieved or hled are readly converible to known amounts of cash or claims to cash
  91. what is the matching principle
    all expenses incurred to generate a specific amount of revenue in a period are matched against that revenue
  92. what is accrual accounting
    revenues are recognized when they are earned and eapenses are recognized in the same period as the related revenue, not necessarily in the period in which the cash is received or expended by the company
  93. what is the full disclosure principle
    it is important that the user be given information that would make a difference in the decision process but not so much information that the user is impeded in analyzing what is important
  94. what is the conservatism principle
    when in doubt when selecting from alternative GAAP methods the method that is least likely to overstte assets and understate liabilities in the current period should be selected
  95. when are revenues or gains recognized
    when the earnings process is complete
  96. when are expenses/ losses recognized
  97. The IASB fromaework for the preparation and presentation of financial statements outlines only two fundamental assumptions what are they
    1. accrual basis accounting

    2. going concern 
  98. what are all the elements in the financial statements
    • 1. comprehensive income
    • 2. revenues
    • 3. expenses
    • 4. gains
    • 5. losses
    • 6. assets
    • 7. liabilities
    • 8. equity
    • 9. investments by owners
    • 10. distributions to owners
  99. what is comprehensive income
    includes all differences between beginning equity and ending equity other han transactions with owners
  100. what are revenues
    inflows, enhancements of assets or reductions of liabilities from delivering goods or services as a part of normal operations.
  101. what are expenses
    outflows uses of assets or the incurrence of liabilities fromdelivering goods or services as part of normal operations
  102. what are gains
    increases in equity from peripheral reansactions and other events except reneue and investments from owners
  103. what are losses
    decreases in equity from peripheral transactions and other events except expenses and distributions to owners
  104. what are assets
    probable future economic benefits to be received by the company as a result of past transactions or events.
  105. what is a liability
    probable future sacrifices of exonomic benefits arising from a present obligaion of the company to transfer assts or provide services to other entites in the fultre as a result of past transactions or events
  106. what is equity
  107. the residual interest in the assets of the company that remains after deducting its liabilities
  108. what are investmetns by owners
    the increases in assets from transfers of cash property or services from owners
  109. what are distribtions to owners
    are decreases in assets from transfers of cash prperty or wervices or the incurrence of a liability to owners
  110. What are the elements of present value measurement
    • 1. estimate of future cash flow
    • 2. expectations about timeing variations of future cash flows
    • 3. time value of money
    • 4. the price of money
    • 5. other factors
  111. what is the fair value objective
    if fair value cannot be determined in the marketplace the objective must be to obtain an estimate of fair value
Card Set
CPA Study Cards ! F1 page 3 - 16
CPA Study cards F1 3-16