Study your flashcards anywhere!

Download the official Cram app for free >

  • Shuffle
    Toggle On
    Toggle Off
  • Alphabetize
    Toggle On
    Toggle Off
  • Front First
    Toggle On
    Toggle Off
  • Both Sides
    Toggle On
    Toggle Off
  • Read
    Toggle On
    Toggle Off
Reading...
Front

How to study your flashcards.

Right/Left arrow keys: Navigate between flashcards.right arrow keyleft arrow key

Up/Down arrow keys: Flip the card between the front and back.down keyup key

H key: Show hint (3rd side).h key

A key: Read text to speech.a key

image

Play button

image

Play button

image

Progress

1/69

Click to flip

69 Cards in this Set

  • Front
  • Back
The financial statements most frequently provided are
the balance sheet

the income statment

the statement of cash flows

the statement of stockholders equity
financial information provided by means other than formal financial statements
prospectuses
news releases
managements forecasts
president's letters
Capital Allocation is
the process of determining how and at what ost money is allocated among competing interests
Problems with financial reporting today:
Falied to provide key performane measures widely used by management such as customer satisfaction indexes

Failed to provide forward looking information.

Failure to disclose soft assets such as brand image and well trained employees.

No real time information
Positive signs of improvements of financial reporting
voluntary disclosures of information deemed relevant

Information available on world wide web

More fair value reporting
Financial reporting should provide information that is
useful to present and potential investors

Helps users asses the timing of cash flows

Clearly portrays the economic resources of of an enterprise and the claims to those resources
The common set of standards and procedures is generally called:
GAAP (Generally Accepted Acoounting Principles)
Organizations instrumental in development of financial accounting standards:
Securities and Exchange Commision

American Institute of Certified Public Accountants

Financial Accounting Standards Board

Governmental Accounting Standards Board
The SEC was established to
help devolp and standardize financial information presented to stockholders
The SEC is was created in
1934
SEC requires registrants to adhere to
GAAP
The SEC has relied on the ________ and the _________ to regulate the accounting profession and and develop and engorce accounting standards.
AICPA and FASB
Companies on the stock exchange are required to submit their financial statements to the
SEC
The AICPA appointed the _______in 1939 which created 51 accounting research bulletins between the years of 1939 and 1959.
Committee on Accounting Procedure.
In _________ the AICPA created the ______________ to be the structured body of accounting principles.
1959; Accounting principles board
The major principles of the Accounting Principles Board are to:
1)advance the written expression of accounting principles

2)to determine appropriate practices

3)to narrow the areas of difference and inconsistency in practice
The APB's mission was to:
devellop an overall conceptual framework to assist in the resolution of problems as they become evident.
The APB's board has ________ members
18-21
The APB board's official prononcements are called
APB opinions.
The APB was dissolved _____ based on the reccomendations of the _________.
1973; Wheat committee
The APB was dissolved because it was charged with
lack of productivity

failing to act promptly to correct alleged accounting abuses
The Wheat Committee was created in __________ to ___________.
1971; to examine APB and determine what changes would be necessary to attain better results.
The standards-setting structure is composed of three organizations, which were:
The Financial accounting Foundation,

The Financial Accounting Standards Advisory Council

The Financial Accounting Foundation
The FASB's mission is to
establish and improve standards of financial accounting and reporting for the guidance and education of the public.
The differences between the FASB and the APB are:
Smaller Membership (7 members)

Full-time renumerated Membership appointed for renewable 5 year terms

Greater Autonomy (not a member of any single professional organization)

Incresed independence (may not hold other jobs)

Not required to be a CPA to be a member of FASB
Two basic premises of FASB are
1) The FASB should be responsive to the needs and viewpoints of the entire economic community

2) It should operate in full view of the public through a "due process" system that gives interested persons ample opportunity to make their views known
Due process consists of
Identifying topics

Research and analysis

Public hearing

Board evaluation and issues exposure draft

evaluate responses to exposure draft and make changes if necessary
The passage of a new FASB Standards Statement requires the support of ( ) of the seven board memebers.
four
The major types of pronouncements that the FASB issues are:
Standards and interpretations

Financial Accounting concepts

Technical bulletins

Emerging issues task force
Standards and interpretations pronouncements from FASB are:
generally accepted accounting principles and modifications or extensions of existing standards
The FASB interpretations have the same authority as standards and require the same votes for passage, but (do/do not) require FASB to operate in full view of the public throught the due process system
do not
Since replacing the APB the FASB has issued __________ standards and __________ interpretations.
147
44
The purpose of FInancial Accounting Concepts is to
set forth fundamental objectives and concepts that the board will use in develloping future standards of accounting and reporting
A statement of financial accounting concepts (does/does not) establish GAAP
does not
Concepts statements (do/do not) pass the same due process system that standards staments do
do
FASB technical bulletins to:
assist entities to apply or implement FASB Standards, and the technicall issues that arise in applying these standards
A technical bulletin is issued only when it is
NOT expected to cause a maor change in accounting practice for a number of interprises

When the cost of implementation is low

the guidance does not conflict with any broad fundamental accounting principle
The Emerging Issues Task Force, which was created in________, was created to:
1984; reach a concensus on how to account for new and unusual financial transactions
Examples of issues of EITF
how to account for pension plan terminations

how to account for revenue from barter transactions by internet companies

how to account for excessive amounts paid to takeover specialists

timely guidence for reporting losses relatedto 9/11
The _________ becomes a "problem filter" for the
FASB.
EITF (Emerging Issues Task Force)
The advisory council of the GASB (governmental accounting standards board)
Governmental Accounting Standards Advisory Council
The Governmental Accounting Standards Board is oversen by
Financial Accounting Foundation
The AICPA originated by
providing the leadership in the development of accounting principles and rules

Regulating the accounting profession and developing and enforcing accounting practice
AcSEC is the
Accounting Standards Executive Committee
The AcSEC speaks for the AICPA through various written communications
Audit and accounting guidelines

Statements of Postion

Practice Bulletins
Audit and Accounting Guidelines of the AICPA
summarize the accounting practices of specific industries and provide specific guidance on matters not addressed by the FASB
Statements of Position of the AICPA
provide guidance on financial reporting topics until the FASB sets standards on the issue in question
Practice Bulletins of the AICPA
indicate AcSEC's views on narrow financial reporting issues not considered by the FASB
The ______________ act of 2002 requires the __________ to oversee the development of future auditing standards.
Sarbanes-Oxley Act;
Public Compnay Accounting Oversight Board
Generally Accepted Accounting Principles are those principles that have
"substantial authoratative support"
Rule 203 of the AICPA's code of Professional Conduct
prohibits a member form expressing an opinion that financial statments conform with GAAP if they contain a material departure from GAAP unless the member can demonstrate that because of unusual circumstances the financial statements would have been misleading
GAAP covered by rule 203 are construed to be
FASB Standards and Interpretations, APB opinions, and AICPA Accounting Research Bulletins
In _________ the AICPA created the ______________ to be the structured body of accounting principles.
1959; Accounting principles board
The major principles of the Accounting Principles Board are to:
1)advance the written expression of accounting principles

2)to determine appropriate practices

3)to narrow the areas of difference and inconsistency in practice
The APB's mission was to:
devellop an overall conceptual framework to assist in the resolution of problems as they become evident.
The APB's board has ________ members
18-21
The APB board's official prononcements are called
APB opinions.
The APB was dissolved _____ based on the reccomendations of the _________.
1973; Wheat committee
The APB was dissolved because it was charged with
lack of productivity

failing to act promptly to correct alleged accounting abuses
The Wheat Committee was created in __________ to ___________.
1971; to examine APB and determine what changes would be necessary to attain better results.
The standards-setting structure is composed of three organizations, which were:
The Financial accounting Foundation,

The Financial Accounting Standards Advisory Council

The Financial Accounting Foundation
The FASB's mission is to
establish and improve standards of financial accounting and reporting for the guidance and education of the public.
Most Authoratative GAAP categories
FASB Standards and Interpretations

APB Opinions

AICPA accounting and research Bulletins
GAAP(B) categories
FASB Technical Bulletins

ACIPA Industry Audit and Accounting Guides

AICPA Statments of Position
GAAP (C) Categories
FASB Emerging Issues Task Force

AICPA AcSEC Practice Bulletins
GAAP (D) Categories
AICPA Accounting Interpretations

FASB Implementation Guides

Widely recognized and prevalant industry practices
Groups that Apply pressure to the FASB
Business entities

CPAs and Accouting firms

AICPA

Acadamicians

Investing Public

Financial Community

Preparers

Governement (SEC, IRS)

Industry Associations
Key provisions of the Sarbanes-Oxley act
An accounting oversight board will be established that will establish auditing, quality control, and independence standards and rules

Stronger independence rules of auditors, e.g. Audit partners will be required to rotate every five years

CEOs and CFOs must foreit bonuses and profits when ther is an accounting restatment

CEOs and CFOs are required to certify that the financial statements and company disclosures are accurate and complete

Audit committes will need independent members and members with financial expertise

Codes of ethics must be in place for senior financial officers
The IASC (International Accounting Standards Committee) was formed in ____, and has recently been renamed the __________.
1973; International Accounting Standards Board