Intermediate Accounting Chapter 1

Front 1

3 essential characteristics of accounting

Back 1

1. the identification, measurement, and communication of financial information
2. about economics entities
3. to interested parties

Front 2

4 financial statements

Back 2

1. balance sheet
2. income statement
3. statement of cash flows
4. statement of owners' or stockholders' equity

Front 3

examples of financial reporting

Back 3

president’s letter, prospectuses,
reports filed with government agencies, news releases, management’s forecasts, and
social or environmental impact statements.

Front 4

capital allocation

Back 4

financial reporting -> users -> capital allocation

Front 5

objective of financial reporting

Back 5

to provide financial information about the reporting entity that is useful to present and potential equity investors, lenders, and
other creditors

Front 6

entity perspective

Back 6

companies are viewed as separate and distinct from their owners

Front 7

decision-usefulness approach

Back 7

assessing (1) the
company’s ability to generate net cash inflows and (2) management’s ability to protect
and enhance the capital providers’ investments

Front 8

accrual-basis accounting

Back 8

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

Front 9

GAAP

Back 9

Generally Accepted Accounting Principles
comprised of FASB Standards, Interpretations, and Staff Positions; APB Opinions; and AICPA Research Bullitens

Front 10

organizations that are instrumental in the development of GAAP

Back 10

SEC, AICPA, FASB

Front 11

SEC

Back 11

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

Front 12

AICPA

Back 12

American Institute of Certified Public Accountants
developed in the private sector
appointed CAP
created APB

Front 13

FASB

Back 13

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

Front 14

CAP

Back 14

Committee on Accounting Procedure
appointed by the AICPA by order of the SEC
issued 51 ARBs
problem-by-problem approach failed

Front 15

ARB

Back 15

Accounting Research Bulletins
51 were issued by the CAP

Front 16

APB

Back 16

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

Front 17

Wheat Committee

Back 17

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

Front 18

FAF

Back 18

Financial Accounting Foundation
developed as a result of the Wheat Committee
selects members of the FASB and the FASAC
funds and oversees the FASB

Front 19

FASAC

Back 19

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

Front 20

5 differences between the FASB and the APB

Back 20

1. smaller membership
2. full-time membership
3. greater autonomy
4. increased independence
5. broader representation

Front 21

types of FASB pronouncements

Back 21

1. standards, interpretations, and staff positions
2. financial accounting concepts
3. emerging issues task force statements

Front 22

FASB Standards

Back 22

considered GAAP

Front 23

FASB Interpretations

Back 23

modify or extend existing standards
considered GAAP

Front 24

FASB Staff Positions

Back 24

provide interpretive guidance and also minor amendments to standards and interpretations
same authority as standards and interpretations
used in lieu of technical bullitens

Front 25

Statements of Financial Accounting Concepts

Back 25

issued by the FASB
not GAAP
same due process of standards

Front 26

EITF

Back 26

Emerging Issues Task Force
"problem filter" for the FASB
short-term emerging issues

Front 27

AcSEC

Back 27

Accounting Standards Executive Committee
established by and authorized to speak for the AICPA
Audit and Accounting Guidelines
Statements of Position (SOP)
Practice Bullitens

Front 28

The Codification

Back 28

changes the way GAAP is documented, presented, and updated
does not create new GAAP
new standards included through an Accounting Standards Update

Front 29

CRS

Back 29

Financial Accounting Standards Board Codification Research System
real-time database that provides easy access to the Codification

Front 30

Expectations Gap

Back 30

what the public thinks accountants should do and what accountants think they can do

Front 31

PCAOB

Back 31

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

Front 32

IASB

Back 32

International Accounting Standards Board
issues IFRS

Front 33

IFRS

Back 33

International Financial Reporting Standards
issued by the IASB
similar to GAAP