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33 Cards in this Set
- Front
- Back
3 essential characteristics of accounting
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1. the identification, measurement, and communication of financial information
2. about economics entities 3. to interested parties |
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4 financial statements
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1. balance sheet
2. income statement 3. statement of cash flows 4. statement of owners' or stockholders' equity |
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examples of financial reporting
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president’s letter, prospectuses,
reports filed with government agencies, news releases, management’s forecasts, and social or environmental impact statements. |
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capital allocation
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financial reporting -> users -> capital allocation
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objective of financial reporting
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to provide financial information about the reporting entity that is useful to present and potential equity investors, lenders, and
other creditors |
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entity perspective
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companies are viewed as separate and distinct from their owners
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decision-usefulness approach
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assessing (1) the
company’s ability to generate net cash inflows and (2) management’s ability to protect and enhance the capital providers’ investments |
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accrual-basis accounting
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records events that change a company's financial statements in the periods in which the events occur, rather than only in the periods in which it receives
or pays cash |
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GAAP
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Generally Accepted Accounting Principles
comprised of FASB Standards, Interpretations, and Staff Positions; APB Opinions; and AICPA Research Bullitens |
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organizations that are instrumental in the development of GAAP
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SEC, AICPA, FASB
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SEC
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Securities and Exchange Commission
established by the federal government requires registrants to adhere to GAAP can stop its registrants from trading on the exchanges supports the establishment of GAAP by the private sector relies on the FASB to develop accounting standards |
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AICPA
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American Institute of Certified Public Accountants
developed in the private sector appointed CAP created APB |
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FASB
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Financial Accounting Standards Board
developed in the private sector as a result of the Wheat Committee standards are supported by the SEC members selected by the FAF, funded by the FAF, and answerable only to the FAF 7 members |
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CAP
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Committee on Accounting Procedure
appointed by the AICPA by order of the SEC issued 51 ARBs problem-by-problem approach failed |
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ARB
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Accounting Research Bulletins
51 were issued by the CAP |
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APB
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Accounting Principles Board
purposes were to (1) advance the written expression of accounting principles, (2) determine appropriate practices, and (3) narrow the areas of difference and inconsistency in practice 18-21 members issued 31 APB opinions |
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Wheat Committee
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examined the organization and operation of the APB and determined the necessary changes to attain better results
submitted its recommendations to the AICPA recommendations resulted in the demise of the APB and the creation of the FAF, the FASB, and the FASAC |
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FAF
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Financial Accounting Foundation
developed as a result of the Wheat Committee selects members of the FASB and the FASAC funds and oversees the FASB |
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FASAC
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Financial Accounting Standards Advisory Council
developed as a result of the Wheat Committe members selected by the FAF consults with the FASB on major policy and technical issues |
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5 differences between the FASB and the APB
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1. smaller membership
2. full-time membership 3. greater autonomy 4. increased independence 5. broader representation |
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types of FASB pronouncements
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1. standards, interpretations, and staff positions
2. financial accounting concepts 3. emerging issues task force statements |
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FASB Standards
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considered GAAP
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FASB Interpretations
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modify or extend existing standards
considered GAAP |
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FASB Staff Positions
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provide interpretive guidance and also minor amendments to standards and interpretations
same authority as standards and interpretations used in lieu of technical bullitens |
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Statements of Financial Accounting Concepts
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issued by the FASB
not GAAP same due process of standards |
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EITF
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Emerging Issues Task Force
"problem filter" for the FASB short-term emerging issues |
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AcSEC
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Accounting Standards Executive Committee
established by and authorized to speak for the AICPA Audit and Accounting Guidelines Statements of Position (SOP) Practice Bullitens |
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The Codification
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changes the way GAAP is documented, presented, and updated
does not create new GAAP new standards included through an Accounting Standards Update |
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CRS
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Financial Accounting Standards Board Codification Research System
real-time database that provides easy access to the Codification |
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Expectations Gap
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what the public thinks accountants should do and what accountants think they can do
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PCAOB
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Public Company Accounting Oversight Board
has oversight and enforcement authority and establishes auditing, quality control, and independence standards and rules established by the Sarbanes-Oxley Act |
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IASB
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International Accounting Standards Board
issues IFRS |
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IFRS
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International Financial Reporting Standards
issued by the IASB similar to GAAP |