Far F1

Front 1

Name the accounting standard-setting bodies in the US (past and present)

Back 1

Securities and Exchange Commission (SEC)

Committee on Accounting Procedure (CAP)

Accounting Principles Board (APB)

Financial Accounting Standards Board (FASB)

Front 2

List the Authoritative Literature Included in the FASB Accounting Standards Codification:
(Note: everything included is part of GAAP)

FEDPRIA

Back 2

1. Financial Accounting Standards Board (FASB)

2. Emerging Issues Task Force (EITF)

3. Derivative Implementation Group Issues

4. Accounting Principles Board Opinions

5. Accounting Research Bulletins

6. Accounting Interpretations

7. AICPA

Front 3

Financial Accounting Standards Board (FASB)

relevant literature to the Codification

SITIP 138

Back 3

a) Statements of Financial Accounting Standards (SFAS)

b) Interpretations

c) Technical Bulletins

d) Staff Implementation Guides

3) Staff Positions

f) Statement No. 138 Examples

Front 4

AICPA relevant literature to the Codification

Back 4

a) Statements of Position

b) Auditing and Accounting Guides (incremental guidance only)

c) Practice Bulletins

d) Technical Inquiry Service

Front 5

SEC Standards Included in the Codification

Back 5

a) Regulation S-X

b) Financial Reporting Releases (FRR)

c) Accounting Series Releases (ASR)

d) Interpretative Releases

e) Staff Accounting Bulletins

f) EITF Topic D and SEC Staff Observer Comments

Front 6

What is the main objective of the International Accounting Standards Board (IASB)

Back 6

To develop a single set of high-quality global accounting stadards

Front 7

IFRIC

Back 7

International Financial Reporting Interpretations Committee - provides guidance on newly identified reporting issues not addressed in the IFRS. IT is sponsored by IASB and provides support when needed

Front 8

International Financial Reporting Standards (IFRS) inlcudes:

Back 8

IFRS

IASs

Interpretations developed by the IFRIC and the former SIC (Standing Interpr. Committee)

Front 9

A mutual goal of the FASB and the IASB is to:

Back 9

converge the accounting standards used in the US and throughout the world

Front 10

SFAC

Back 10

Statements of Financial Accounting Concepts serve as the basis for FASB pronouncements but ARE NOT considered GAAP

Front 11

SFAC No.8 - Conceptual Framework for Financial Reporting - Chapter 1: The objective of General Purpose Financial Reporting

Back 11

The main purpose is to disclose the entity's performance through providing useful financial information to primary users of the financial reports. (uses accrual basis accounting)

Front 12

Primary users of General Purpose Financial Reports are:

Back 12

external users: existing, potential investors, lenders, creditors,

Front 13

SFAC No.8 - Conceptual Framework for Financial Reporting - Chapter 3: Qualitative Characteristics of Useful Financial Information includes 2 things:

Back 13

1. Fundamental Qualitative Characteristics

2. Enhancing Qualitative Characteristics

Front 14

SFAC No.7 "Using Cash Flow Information and Present Value Accounting Measurements"

5 Elements of PV Measurement (UVOTE)

Back 14

1) The price for bearing Uncertainty

2) Expectation about timing Variation of FCF (should it be at the ending period or beginning. think leases)

3) Other factors (liquidity, exchange, inflation)

4) TVM

5) Estimate of FCF

Front 15

Fundamental Qualitative Characteristics

Back 15

a) Relevance

b) Faithful Representation

Front 16

Relevance (PCM)

Back 16

Means capable of making a difference in the decision making process of a user

Passing Confirms Money

Front 17

Characteristics of relevance (PCM)

Back 17

Predictive Value

Confirming Valye

Materiality

Front 18

Faithful representation (aka reliable)

Back 18

Complete - all necessary information is included

Neutral - free from bias

Free from Error - no error in presentation, selection or error off of omission

Front 19

Enhancing Qualitative Characteristics

Back 19

Compare and

Verify

in Time

to Understand

Front 20

Replacement cost:

Back 20

is defined as the amount of cash or equivalent that would be paid to acquire or replace and asset currently. it is an acquisition costs.

Front 21

List the full set of 5 financial Statements as seen in SFAC NO. 5 "Recognition and Measurement in the FS"

Back 21

Statement of Financial Position

Statement of Earnings

Statement of Comprehensive Income'

Statement of Cash Flows

Statement of Changes in Owner's Equity

Front 22

Fundamental Assumptions of US GAAP (10)

Back 22

entity assumption - entity separate from owner

going concern

monetary unit

periodicity

historical cost principle

revenue recognition principle (earned, realized or realizable)

matching principle

accrual accounting

full disclosure principle

conservatism principle

Front 23

Fundamental Assumptions of IASB's IFRS

Back 23

accrual basis accounting

going concern

Front 24

SFAC No. 6 - Elements of Financial Statements

(REGL ALE needs ID + Comp Inc)

Back 24

Revenue

Expense

Gain

Loss

Assets

Liabilities

Equity

Investment by Owners

Distributions to Owners (both excl. from Comprehensive Income)

Comprehensive Income

Front 25

how to calculate Comprehensive Income

Back 25

Net Income

+ Other Comprehensive Income

= Comprehensive Income

Front 26

IFRS Elements of Financial Statements

Back 26

ALE + Income (RG) & Expense (EL)

Capital Maintenance Adjustments - Increase and decrease in equity that arises from revaluation or restatements of A&L

Front 27

The purpose of Income Statements is to:

Back 27

provide information about the performance of the company for a period of time.

Front 28

The uses of Income Statements is to:

Back 28

determine profitability, value for investment purposes, credit worthiness

Front 29

Presentation order of Major Components for Income Statement and Retained Earning Statement

Back 29

Income from continuing ops (gross and net of tax)

Discontinued ops

Extraordinary items

Accounting changes and error correction

Front 30

Basic Multi-step Income Statement

Back 30

Normal Operations

Non-operating

Income before taxes

Income after taxes aka net income aka income from continuing operations

Front 31

Basic Single-step Income Statement

Back 31

Revenue and other items

Net Income aka income from cont. ops

Front 32

Discontinued ops: 6 requirements for Held For Sale classification

Back 32

1. Mgmt committed to a plan to sell

2. Component is available for immediate sale as is

3. actively seeking buyes

4. the sale of component is probable withing a year

5. the sale is actively marketed

6. actions to complete the sale make it unlikely that the plan will be withdrawn of significant changes will be made to it

Front 33

Accounting Rules for discontinued operations

Back 33

eliminate from ongoing operations

no future significant involvement of the entity after sale of the component

Front 34

Discontinued Operations items (nox)

Back 34

-Impairment loss (carrying value>fv-cost of sale aka net realizable value) - initial and subsequent

-G/L on disposal

-results of operations of the component

*gain after impairment ca be recognized to the extend of the previous impairment booked

Front 35

Extraordinary items (under US GAAP) have to be (nox)

Back 35

unusual AND infrequent

-material in nature

-characteristic significantly different from normal

-not expected to recur in the foreseeable future

- not normally considered in regular ops

Front 36

Extraordinary items under IFRS

Back 36

DO NOT EXIST

Front 37

Material unusual OR infrequent items

Back 37

are part of non-operating items in the continuing ops and NOT extraordinary

Front 38

4 Examples of extraordinary items

Back 38

-loss from natural disaster of unusual nature

-expropriation by government

-prohibition of product line

-certain LTD write-off if specifically stated to be unusual and infrequent

Front 39

Where are changes recorded when they arise due to accounting changes?

Back 39

Statement of Retained Earnings as adjustment to beginning retained earning

Front 40

name 3 types of accounting changes

Back 40

1. changes in accounting estimate (prospective)

2. changes in accounting principle (retrospective GR)

3. changes in accounting entity

Front 41

Changes in accounting estimate are (hint. depreciation schedule)

Back 41

PROSPECTIVE - going forward

-change in useful life estimate

-change in accounting principle inseparable from change in estimate

-unless material, they do not require a note

Front 42

Changes in accounting principle

Back 42

RETROSPECTIVE - adjust the past

apply to GAAP/GAAP or IFRS/IFRS changes only

Front 43

Exception to the General Rule of Changes in Accounting Principles

Back 43

anything that is changed to LIFO or related to changes in depreciation method need to be PROSPECTIVE

Front 44

Changes in accounting entity require:

Back 44

RESTATE

(note. IFRS does not include the concept of change in accounting entity)

Front 45

Error Correction is recorded as

Back 45

PRIOR PERIOD ADJUSTMENT and requires RESTATEMENT

examples. Non-GAAP to GAAP and vice versa

Front 46

Comprehensive Income drills down to:

Back 46

NON OWNER TRASACTIONS

Net income + OCI - Comprehensive Income

Front 47

OCI - Other Comprehensive Income -> direct to Equity -> will need reclassification

Back 47

PUFE likes to Revalue his Income

Pension adjustments (gain or loss)

Unrealized g/l (av-f-s- secs)

Foreign currency items (gain or loss)

Effective portion cash flow hedges

Revaluation surplus (IFRS Only)

Front 48

comprehensive income presentation

Back 48

Single statement approach with Income Statement (Start with Revenue)
or separately as Statement of Comprehensive Income (Start with NI)

Front 49

Classified balance sheet means:

Back 49

it distinguishes current from non-current items

Front 50

Summary of Significant Accounting Policies under US GAAP is

Back 50

the first/second note of financial statements that includes information about measurement bases, accounting principles and methods used, criteria, policies and pricing utilized

GR: include things that won't be included in other places

Front 51

2 main IFRS's requirements for Notes to Financial Statements include:

Back 51

1) disclosure of judgments and estimates that management has made in the process of accounting policies that have a significant effect on the financial statements (GAAP only needs estimates)

2)explicit and unreserved statement that IFRS is being applied

Front 52

Remaining Notes to Financial Statements (~7)

Back 52

-changes in equity incl. capital stock, PIC, RE, TS

-required marketable securities information

-contingency losses (possible future lawsuits)

-pension plan description

-post BS disclosure

-related party transactions

-disclosure of risk & uncertainties

Front 53

Disclosure of Risks & Uncertainties in Notes to Financial Statements under IFRS are:

Back 53

much narrower and drill down to identifying estimates with high risks of being wrong in the future due to inadequate information at present

Front 54

Interim financial reporting aka.

Back 54

Quarterly financial reporting is not required by either IFRS or GAAP. However, SEC requires that if the entity is a publicly traded company

Front 55

Interim financial reporting characteristics (~5):

Back 55

-timeliness over reliability

-has to be explicitly marked as unaudited

-matching revenue and expenses by quarter

-income tax calculation under GAAP is to use YTD income*estimated effective annual tax rate and then subtract from provision from last quarter (estimate is that of the best available information)

-other issues that might affect the quarterly reporting and cause to either be overvalued or undervalued (eg seasonality factor)

Front 56

Segment reporting is required by IFRS and GAAP for:

Back 56

Public companies only

Front 57

Operating segment is:

Back 57

a component of an enterprise:

- that engages in business activity from which it may earn revenue and incur expenses

-whose operating results are regularly reviewed by Chief Operating Decision Maker (CODM)

-for which discrete information is available

Front 58

Reportable segments are:

Back 58

hose that meet reporting criteria for separate reporting

Front 59

2 Quantitative Thresholds for Reportable Segments (think materiality test)

Back 59

1) 10% size test (Total amounts of combined, both external and internal)

a)revenue

b)reported P&L

c)Assets

2) 75% reporting sufficiency test (Total amount of consolidated amount vs external amounts only)

keep adding segments until the combination of at least 75% of external (consolidated) revenue of segments is reported

3) all other segments are then lumped together

Front 60

Segment Profit (Loss) formula

Back 60

Revenues (internal and external)

Less: Directly traceable costs

Less: Reasonably Allocated costs

Operating Profit (Loss) aka EBIT

items excluded: general, interest exp, income tax exp

Front 61

name SEC required forms for domestic companies

Back 61

10-K - Annual Report

10-Q - Quarterly Report

11-K - Annual report on benefit plan(s)

8-K - major events

Form 3, 4, 5 - higher ups and 10% or more beneficial stock owners

around 50 required forms total

Front 62

name 2 SEC required forms for foreign entities trading in the US

Back 62

20-F and 40-F (specific Canadian companies)

6-K

Front 63

Regulation S-X (17 CFR part 210)

Back 63

form and content and requirements for interim and annual financial statements to be filed with SEC

Front 64

SEC Requirement for Interim Financial Statements:

Back 64

BS

IS

Statement of CF

reviewed by an independent public auditor but doesn't have to be audited. must include "unaudited" in the notes.

quarterly for domestic, semi-annual for foregin

Front 65

SEC Requirement for Annual Financial Statements

Back 65

Audit requirement

Period Presented (BS-2 IS/CF-3)

Front 66

XBLR

Back 66

Extensible Business Reporting Language, software utilizing data tags using XML language to describe financial information for business and financial reporting.

Front 67

SEC filing timeline (3)

Back 67

60 days after FYE - large accelerated filers (>$700mln in global market value of outstanding equity held by 3rd parties)

75 days after FYE - accelerated filers

90 days after FYE - all others (<75$mln)