Intermediate Acct 1: Chapter 1-5

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Accounting Principles Board (APB)

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board that advances the written expression of accounting principles, determine appropriate practices, and narrows the areas of difference and inconsistency in practice.

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Accounting Research Bulletins

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bulletins that dealt wtih a variety of accounting problems, this lead to the development of APB

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Accrual Basis Accounting

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ensures that a company records events that change financial statements in the periods in which the event ocur, rather than only in the periods in which it receives or pays cash.

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American Institute of Certified Public Accountants (AICPA)

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national professional organization of practicing CPA's. Important contributor to the development of GAAP.

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APB Opinions

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board's official pronouncements based on research studies and supported by reasons and analysis.

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Auditing Standards Board

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board under AICPA that develops auditing standards.

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Committee on Accounting Procedure (CAP)

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committee appointed by AICPA which is composed of practicing CPA's. Responsible for the release of accounting research bulletins.

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Emerging Issues Task Force (EITF)

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created by FASB and comprised of representatives from the CPA frims and financial statement prepareers. Responsible on reaching a consensus on how to account for new and unusual financial transactions that may potentially create differing financial reporting practices.

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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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Financial Accounting

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process that culminates in the preparation of financial reports on the enterprise for use by both internal and external parties.

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Financial Accounting Standards Board (FASB)

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establieshes and improve standards of financial accounting and reporting for the guidance and education of the public, which includes issuers, auditors, and users of financial information.

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Financial Reporting

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Examples: president's letter or supplementary schedules in the corporate annual report, prospectuses, reports filed with government agencies, news releases, management's forecasts and social or environmental impact statements.

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Financial Statements

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balance sheet, income statement, statement of cash flow, statement of owner's or stockholders equity.

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Generally Accepted Accounting Principles (GAAP)

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common set of standards and procedures that a governing body has established for reporting in a given area or that over time a given practice has been accepted as appropriate because of its universal application.

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Governmental Accounting Standards Board (GASB)

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similiar to the FASB, has an advisory council called the governmental accounting standards advisory council. Came in to place when large cities faced bankruptcy in the 70's.

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International Accounting Standards Board (IASB)

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London Based; standards accepted for international use.

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Interpretations

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modifications or extensions to existing accounting standards

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Securities & Exchange Commission (SEC)

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established by federal government to help develop and standardize financial information presented to stockholders.

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Public Company Accounting Oversight Board (PCAOB)

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established by sarbanes oxley act: has oversight and enforcement authority and establishes auditing, quality control, and independence standards and rules.

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Sarbanes Oxley Act of 2002

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Increases the resources for the SEC to combat fraud and curb poor reporting practices.

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Standards Statement

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requires the support of four of the seven board memebers. Statements are considered GAAP and therby binding in practice.

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Statement of Financial Accounting Concepts

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sets fourth fundamental objectives and concepts that the board uses in developing future standards of financial accounting and reporting.

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Wheat Committee

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study group of establishment of accounting principles. Studies the organization and operation of the APB and determined the necessary changes to attain better results.