Accounting, Test 1

Front 1

Is financial reporting bound by GAAP?

Back 1

No, only financial statements are bound by GAAP

Front 2

FASB has how many members?

Back 2

Five

Front 3

IFRS vs. GAAP

Back 3

IFRS - broader and simpler. *Principle-based*
GAAP - detailed and prescriptive. *Rule-based*

Front 4

Conceptual Framework Levels

Back 4

1. Basic objectives ("why")
2. Qualitative charcteristics and elements
3. Recognition and measurement concepts ("how")

Front 5

Purpose of Qualitative Characteristics

Back 5

Determine usefulness of info

Front 6

Primary Qualities

Back 6

1. Relevance
2. Reliability

Front 7

Relevance

Back 7

1. Capable of making a difference
2. Predictive value
3. Feedback value
4. Timeliness

Front 8

Reliability

Back 8

1. Verifiable
2. Faithful representation
3. Neutrality

Front 9

Secondary Qualities

Back 9

1. Comparability
2. Consistency

Front 10

Comparability

Back 10

Info is measured and reported similarly for different companies

Front 11

Consistency

Back 11

Applying the same accounting treatment from period to period

Front 12

Basic Elements: "moment in time"

Back 12

1. Assets
2. Liabilities
3. Equity

Front 13

Basic Elements: "period of time"

Back 13

1. Investments by owners
2. Distributions to owners
3. Comprehensive income
4. Revenues
5. Expenses
6. Gains
7. Losses

Front 14

Basic Assumptions

Back 14

1. Economic entity
2. Going concern
3. Monetary unit
4. Periodicity

Front 15

Basic Principles

Back 15

1. Measurement principle: historical cost & fair value
2. Revenue recognition
3. Expenses recognition
4. Full disclosure

Front 16

Constraints

Back 16

1. Cost-benefit
2. Materiality
3. Industry practice
4. Conservatism

Front 17

Equity Composition of Proprietorship or Partnership

Back 17

1. Capital account
2. Drawing account

Front 18

Equity Composition of Corporation

Back 18

1. Common stock
2. Additional paid-in capital
3. Dividends
4. Retained earnings

Front 19

Adjusting Entries

Back 19

1. Prepayments
2. Accruals

Front 20

Interest Formula

Back 20

Face value of note
x Annual interest rate
x Time (in years~1/12)

Front 21

Income Statement

Back 21

Revenues
- Expenses
= Net income/loss

Front 22

Statement of Retained Earnings

Back 22

Retained earnings, beg.
+ Net income
Subtotal
- Dividends
= Retained earnings, end.

Front 23

Balance Sheet

Back 23

1. Assets
2. Liability
3. Stockholders' equity

'Total Assets' & 'Total Liabilities and Stockholders' Equity' must match