Ch 1 Smartbook

What financial reporting model is used by most profit-oriented businesses and not-for-profit entities?

Accrual Accounting

Which accounting model best meets the primary goal of users of financial reporting?

Accrual Basis

The FASB Accounting Standards (blank) organizes all relevant accounting pronouncements in a searchable, online database.

Codification

Who created the SEC and why

Congress because of the stock market crash of 1929

What are the three primary forms of business organizations?

Corporation, Sole Proprietorship, and Partnership

A code or moral system that provides criteria for evaluating right and wrong is referred to as

Ethics

The price that would be received to sell assets or paid to transfer a liability in an orderly transaction between market participants at the measurement date is

Fair Value

(T/F) The primary function of financial accounting is to provide useful financial information to users who are internal to the business.

False

(BLANK) accounting is chiefly concerned with providing information to external users.

Financial

The (BLANK) was established to set US accounting standards and is the current standard

Financial Accounting Standards Board (FASB)

What is IIA

Institute of Internal Auditors

what is IMA

Institute of Management Accountants

It is the responsibility of (blank) to apply Generally Accepter Accounting Principles in preparation of the company's financial statements

Management

Role of an Auditor

Offer credibility to financial statements

Recording depreciation on fixed assets is an example of which approach to expense recognition?

Systematic and rational allocation

According to SFAC 5, the four criteria that must be met for an item to be recognized in the basic financial statements are

The item meets the definition of an element. The information about the item is relevant to decision making. The item has relevant attributes that are measurable. The information about the item is reliable.

(T/F) The conceptual framework does not prescribe GAAP.

True

The AICPA is the national professional organization for certified professional public (BLANK)

accountants

Information provided by financial accounting should help investors and creditors evaluate

amounts, timing, uncertainty

A probable future economic benefit obtained or controlled by a particular entity as a result of a past transaction or events is a(n)

asset

The purpose of the FASB's conceptual framework in accounting is to

establish objectives and fundamental concepts on which to base standards

The accrual accounting model is best able to achieve the goal of predicting

future cash

Measuring assets and liabilities based on their original transaction value is an example of

historical cost

The five attributes are

historical cost, net realizable value, current cost, present value of future cash flows, and fair value

The four basic accounting assumptions

identify the frequency of reporting, identify the denomination in which reporting occurs, identify the entity being reported on, assume the entity will continue to exist

The main focus of accounting information is to

provide useful information for decision making

The primary purpose of financial reporting is to provide useful information for decision making to

providers of capital

Recognition refers to the process of

recording information in the basic financial statements

Ethics deals with the ability to distinguish

right and wrong

What best represents an important objective of the IASB?

to develop high quality global standards

what is the goal os the SEC

to restore investor confidence

What is monetary unit

used in US financial statements is the US dollar

The process of associating numerical amounts to the elements in the financial statements is called

measurement

GAAP currently employs a (blank) (blank) measurement model

mixed attribute

The "Accounting Constitution", a coherent system of interrelated objectives and fundamentals that lead to consistent standards and that prescribe the nature, function, and limits of financial accounting and reporting is referred to as

the conceptual framework

The IASB's main objective is

to develop a single set of global accounting standards that are high-quality, understandable, and enforceable

what is AICPA

American Institute of Certified Public Accountants

The private sector organization that is currently responsible for settling accounting standards in the US is the

Financial Accounting Standards Board (FASB)

Select the four criteria used to determine if an item is recognized in the financial statements according to SFAC 5.

Measurability, Definition, Reliability, and Relevance

Which of the following are among the basic assumption underlying US GAAP?

Periodicity, Monetary Unit, Economic Entity, and Going Concern

What was the purpose of the FASB Accounting Standards Codification project?

Reorganize all relevant accounting pronouncements in US GAAP

what is periodicity

assumption that allows the life of a company to be divided into artificial time periods to provide timely information

What is going concern

assumption that anticipates that a business entity will continue to operate indefinitely

What is economic entity

assumption that presumes that economic events can be identified specifically with an economic entity