Any company claiming compliance with GAAP must comply with all standards and interpretations, including disclosure requirements.
T/F. The primary governmental body that has influence over the FSB is the SEC.
T/F. The FASB has a government mandate and therefore does not have to follow due process in issueing a standard.
False. In establishing financial accounting standards, the FASB relies on two basic premises:1.
the FASB should be responsive to the needs and viewpoints of the entire economic community, not just the public accounting profession, and;(2) it should operate in full view of the public through a “due process” system that gives interested people ample opportunities to maketheir view known.
T/F. The objective of financial statements emphasizes a stewardship approach for reporting financial information.
False. In addition to providing decision-useful information about future cash flows, management also is accountable to investors for the custody and safekeeping of the company’s economic resources and for their efficient and profitable use; however, this is not considered an objective.
The purpose of the objective of financial reproting is to prepare a balance sheet, and income statement, a statement of cash flows, and a statement of owners’ or stockholders’ equity.
False. The objective of financial reporting is to provide financial information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors in making decisions in their capacity as capital providers.
T/F. Because they are generally shorter, FASB interpretations are subject to less due process, compared to FASB standards.
False. The FASB follows the same due process procedures for interpretations and standards.
T/F. The objective of financial reproting uses an entity rather than a proprietary approach in determining what information to report.
GAAP stands for…?
Generally Accepted Accounting Principles
What is the process accounting standard-setters use in establishing accounting standards?
Research, discussion paper, exposure draft, standard
GAAP is comprised of…
Any accounting guidance inlcuded in the FASB codification
What is the authoritative status of the conceptual framework?
It is used when there is no standard or interpretation related to the reporting issues under consideration
The objective of financial reporting places most emphasis on…
Reporting to capital providers
General-purpose financial statements are prepared primarily for….?
Economic consequences of accounting standard-setting means…
accounting standards can have deterimental impacts on the wealth levels of the providers of financial information
The expectations gap is…?
What the public thinks accountants should do and what accountants think they can do
What is the difference between financial accounting and managerial accounting?
– Financial accounting is the process that culminates in the preparation of financial reports relative to the enterprise as a whole for use by parties both internal and external to the enterprise. – Managerial accounting is the process of identifcation, measurement, accumulation, analysis, preparation, interpretation, and communication of financial information used by managers to plan, evaluate, and control within an organization and to assure appropriate use of, and accountability for, its resources.
What are the financial statements most frequently provided?
– income statement, statement of owners’ and stockholders’ equity, balance sheet, statement of cash flows
What is the difference between financial statements and financial reporting?
– Financial statements are the principal means through which financial information is communicated to those outside an enterprise.- Financial reporting are those means other than financial statements used to report financial information that take various forms
What is the objective of financial reporting?
to provide financial information about the reporting entity that is useful to present and potential equity investors, lendors, and other creditors