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39 Cards in this Set
- Front
- Back
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Define Financial Accounting
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preparation of financial reports on the company for use by both internal and external parties.
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Define Managerial Accounting
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identifying,measuring,analyzing, and communicating financial info. needed by management to plan, control, and evaluate a company's operations.
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Name four financial statements most frequently provided.
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balance sheet, income statement, statement of cash flows, and statement of owners' equity.
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Explain the capital allocation process
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Financial reporting -> Users -> capital allocation
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What are some of the challenges facing accounting?
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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. |
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What are the objectives of financial reporting?
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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 |
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What is GAAP?
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Generally accepted accounting principles
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What does "generally accepted" mean?
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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.
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What orgnizations were instrumental in the development of GAAP?
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SEC
AICPA FASB GASB |
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What is SEC?
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Securties and exchange commission
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What is AICPA
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American Institute of Certified Public Accountants
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What is FASB
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financial accounting standards board
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what is GASB?
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government accounting standards board
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what is CAP?
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Committee on Accounting Procedure
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Which group developed the 51 Accounting Research Bulletins?
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CAP
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What is the APB?
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Accounting Principles Board
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What were the major purposes of the APB?
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determine appropriate practices, advance the written expression of accounting principles and narrow the area of difference and inconsistency in practice
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What was the APB's official pronouncement?
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APB Opinions
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What did the Wheat Committee do?
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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.
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What is FASB, FAF, and FASAC?
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Financial Accounting Standards Board, Financial Accounting Foundation, and Financial Accounting Standards Advisory Council.
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How many members are in FASB?
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7 members
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What are the significant differences between the FASB and the APB?
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1 smaller membership
2 well paid, full time members 3 greater autonomy 4 increased independence 5 broader representation |
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Who appoints members of the FASB?
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The FAF
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What is the due process system of the FASB?
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Agenda, Research (discussion memorandum), public hearing, exposure draft, fasb standard.
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what are the three 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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what is AcSec
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accounting standards executive committee
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what does the AcSec do?
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speaks for the AICPA in the area of financial accounting and reporting.
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what is the most authoritative in the house of gaap?
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1. FASB standards, interpretations, and staff positions
2. APB opinions 3. AICPA accounting research bulletins |
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what is catagory C in house of GAAP
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1 FASB emerging issue task force
2 AICPA AcSEC practice bulletins |
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what is rule 203 of aicpa's code of professional conduct?
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members are prohibited from expressing an unqualified opinion on financial statements that contain material departure from GAAP.
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who or what has the least authority in house of GAAP
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1. AICPA accounting interpretations
2. GAAP implementations guides 3 widely recognized and prevalent industry practices |
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what is found in category b of house gaap?
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1. FASB technical bulletins
2. AICPA industry audit and accounting guides 3. AICPA statement of position |
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what is sarbanes-oxley act?
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a law which increases the resources for the SEC to combat fraud and curb poor reporting practices.
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name some changes implemented by the sarbanes-oxley act to the accounting profession
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1. code of ethics for senior financial officers
2. audit committees must be comprised of independent members. |
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Name the two sets of standards accepted for international use
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US GAAP
IFRS (international financial reporting standards |
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what does FAF do?
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1. selects members of FASB
2 funds FASB's activities 3 exercises general oversight |
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what is FASB's mission?
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to establish and improve standards of financial accounting and reporting
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what does fasac do?
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consult with fasb on major policy issues.
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what are the two premises that fasb relies on?
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1 responsive to entire economic community
2 operate in full view of the public |
