Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
15 Cards in this Set
- Front
- Back
|
Objective 1: Identify the major financial statements and other means of reporting
|
1. Income Statement (revs/exps)
2. Balance Sheet (assets, liabilities) 3. Statement of CFs (CF from operations, investing, financing) 4. Statement of Stockholders' Equity 5. Other (reports filed with SEC, press releases, enviro impact statements, prospectus, etc) |
|
|
Income Statement
|
For a period of time
Accrual Accounting-- how much did the company earn? *moving earnings from 1 year to next, this is where earnings can be 'manufactured'* Multi/Single Step |
|
|
Balance Sheet
|
As a POINT IN TIME what our assets, liabilities, etc are
|
|
|
Statement of Cash Flows
|
Reverses out effect of accrual accounting to show cash flows from operations, investing, and financing (borrowing, issuing stock)
|
|
|
Statement of SE
|
-equity sales
-closing out of NI to RE -effects of divs -purchase/sales of treasury stock |
|
|
Objective of Financial Reporting
|
-Provide info to equity investors, lenders so they can make informed decisions
-users expect fair, clear, complete info about financial operations -assess timing, amts, uncertainty of cash flows |
|
|
Effective Capital Allocation
|
-critical to healthy economy
-increases innovation and productivity -efficient and liquid mkt for securities trading |
|
|
Major Policy Setting Bodies
|
-SEC
-FASB -GASB -EITF -EIFRS |
|
|
SEC
|
-Est by feds after 1929 crash with SE act of 34
-Broad power over cos listed on stock exchanges -encouraged private sector to make a standard setting body--> FASB, AICPA -Supports FASB/relies on them to set standards, acts with restraint |
|
|
AICPA
|
American Institute of CPAs:
-contribs to GAAP -passed 51 Accounting Research Bulletins (ARBs) 1931 -created Accounting Principles Board (APB) in 1959, they made 31 APB opinions, dissolved '73--> FASB |
|
|
FASB & Diffs from APB
|
-major operating org, make/improve acct standards for guidance and edu of public
1. Smaller (5 instead of 18 people) 2. Full-time, renumerated membership: 5 year renewable terms 3. Greater Autonomy: APB was of the AICPA, FASB appointed by and only answers to FAF 4. More independence: fasb members sever all ties with firms, institutions, companies etc 5. Broader representation: not necessary to be CPA to be in FASB -they get their research from their own staff and task force groups -EITF opinion next best to FASB |
|
|
3 types of Pronouncements (aka financial acct standards)
|
1. Standards, Interpretations, Staff Positions
-160 standards, 48 interps, 50 sps 2. Statements of Financial Acct concepts: framework for solving; does not establish GAAP til it goes thru due process 3. EITF statements: for quick, new, unusual ones; handles smaller cases so FASB can focus on big stuff |
|
|
User Groups that have an Impact in Rule Making
|
-acct firms
-acedemians -investing public -financial community -governments -industry associations |
|
|
Challenges facing Financial Reporting
|
-reporting nonfinancial measures
-forward looking measures (not GAAP to include) -soft assets: internally developed patents don't go on books, brand value, etc -timeliness (getting better, still not great) |
|
|
Sabanes Oxley Act (SOX)
|
-established Public Company Accounting Oversight Board (PCAOB)
-stronger independence rules for auditors -came about because of enron and worldcom -Requires CEOs and CFOs to personally certify F/Ss are complete and accurate -CFOs and CEOs forfeit bonuses and profits when there is an acct restatement -Requires audit committee members to be independent, have financial expertise -requires code of ethics for senior financial officers -requires public companies to attest to effectiveness of internal controls |
