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39 Cards in this Set

  • Front
  • Back
Define Financial Accounting
preparation of financial reports on the company for use by both internal and external parties.
Define Managerial Accounting
identifying,measuring,analyzing, and communicating financial info. needed by management to plan, control, and evaluate a company's operations.
Name four financial statements most frequently provided.
balance sheet, income statement, statement of cash flows, and statement of owners' equity.
Explain the capital allocation process
Financial reporting -> Users -> capital allocation
What are some of the challenges facing accounting?
1. financial reports fail to provide Nonfinancial measurements.
2 fail to provide forward looking information.
3. fail to provide information on soft assets (intangibles).
4. Timeliness - little or no real time financial information.
What are the objectives of financial reporting?
provide information:
1 useful in investment and credit decisions
2 useful in assesing future cash flows
3 about company's resources, claims to those resources, and changes in them
What is GAAP?
Generally accepted accounting principles
What does "generally accepted" mean?
an authortative accounting rule making body has established a principle of reporting in a given area or that over time a given practice has been accepted as appropriate b/c of its universal application.
What orgnizations were instrumental in the development of GAAP?
What is SEC?
Securties and exchange commission
What is AICPA
American Institute of Certified Public Accountants
What is FASB
financial accounting standards board
what is GASB?
government accounting standards board
what is CAP?
Committee on Accounting Procedure
Which group developed the 51 Accounting Research Bulletins?
What is the APB?
Accounting Principles Board
What were the major purposes of the APB?
determine appropriate practices, advance the written expression of accounting principles and narrow the area of difference and inconsistency in practice
What was the APB's official pronouncement?
APB Opinions
What did the Wheat Committee do?
The Wheat committee examined the APB and determined the necessary changes to attain better results...resulted in the demise of the APB and creation of 3 new organizations: FASB, FAF, FASAC.
What is FASB, FAF, and FASAC?
Financial Accounting Standards Board, Financial Accounting Foundation, and Financial Accounting Standards Advisory Council.
How many members are in FASB?
7 members
What are the significant differences between the FASB and the APB?
1 smaller membership
2 well paid, full time members
3 greater autonomy
4 increased independence
5 broader representation
Who appoints members of the FASB?
What is the due process system of the FASB?
Agenda, Research (discussion memorandum), public hearing, exposure draft, fasb standard.
what are the three types of FASB pronouncements?
1 standards, interpretations, and staff positions
2 financial accounting concepts
3 emerging issues task force statements
what is AcSec
accounting standards executive committee
what does the AcSec do?
speaks for the AICPA in the area of financial accounting and reporting.
what is the most authoritative in the house of gaap?
1. FASB standards, interpretations, and staff positions
2. APB opinions
3. AICPA accounting research bulletins
what is catagory C in house of GAAP
1 FASB emerging issue task force
2 AICPA AcSEC practice bulletins
what is rule 203 of aicpa's code of professional conduct?
members are prohibited from expressing an unqualified opinion on financial statements that contain material departure from GAAP.
who or what has the least authority in house of GAAP
1. AICPA accounting interpretations
2. GAAP implementations guides
3 widely recognized and prevalent industry practices
what is found in category b of house gaap?
1. FASB technical bulletins
2. AICPA industry audit and accounting guides
3. AICPA statement of position
what is sarbanes-oxley act?
a law which increases the resources for the SEC to combat fraud and curb poor reporting practices.
name some changes implemented by the sarbanes-oxley act to the accounting profession
1. code of ethics for senior financial officers
2. audit committees must be comprised of independent members.
Name the two sets of standards accepted for international use
IFRS (international financial reporting standards
what does FAF do?
1. selects members of FASB
2 funds FASB's activities
3 exercises general oversight
what is FASB's mission?
to establish and improve standards of financial accounting and reporting
what does fasac do?
consult with fasb on major policy issues.
what are the two premises that fasb relies on?
1 responsive to entire economic community
2 operate in full view of the public