Accounting Research

Based on your understanding of the FASB's Concepts Statements, which of the following statements would you not expect to have come from the Concepts Statements?

"An entity shall initially recognize the financial statement effects of a tax position when it is more likely than not..."

To browse to guidance on employee pensions, in which "Area" should your search begin?

"expenses"

When new guidance (that is, an "Accounting Standards Update") is issued by the FASB, it is added to the Codification and labeled as

"pending content"

In the following reference, which number reflects the Codification section? ASC 840-20-25-1

25

In the following reference, which number reflects the Codification topic? ASC 840-20-25-1

840

A key objective of which of the following documents is to seek constituent views, early in the process, regarding what general direction the FASB might take on a project?

A Preliminary Views document

An account receivable is a "contract that conveys...[the right to] receive cash." For this reason, it is considered which of the following?

A financial asset

Choose the correct statement regarding the effective dates of existing versus revised revenue guidance.

ASC 605 (Revenue Recognition) is currently effective; ASC 606 (Revenue from Contracts with Customers) will become effective in periods beginning after 12/15/17.

Which of the following is the term used today to describe a final accounting standard issued by the FASB?

ASU Accounting Standards Update

The guidance currently used by the FASB to update the Codification is referred to as which of the following?

Accounting Standards Update

The FASB is funded primarily by which of the following?

Accounting Support Fees

An accounting issues memo may be necessary when a transaction is which of the following?

All answers are correct

A company may review SEC correspondence ("CORRESP") in order to do which of the following?

All of the answers are correct

Although the chapter focused largely on the FASB's standard-setting activities, other organizations that also periodically revise and update their standards include which of the following?

All of the answers are correct

Post-implementation activities are conducted by the FASB for which of the following reasons?

All of the answers are correct

Recognition guidance is typically addressed in Section 25 of each Codification topic. In addition, what other section(s) within a topic may address recognition-related issues?

All of the answers are correct

Is it acceptable to cite from accounting firm guide books, in your technical documentation?

All of the answers are correct (Yes)

It may not always be possible to research the accounting for proposed transactions. Research may be required at the time, or after, a transaction is executed if

All of the other answers are correct

Within which of the following environments is accounting research performed?

All other answers are correct

Correct statements about the Codification include which of the following?

All statements are true.

To browse to the "Inventory" topic, in which "Area" should your search begin?

Assets

Accounting measurement describes which of the following?

At what value (i.e., for how much) a financial statement item should be recorded

Which of the following parties might be most likely to request that the FASB take on a project that would result in clarifications of existing GAAP, or additional interpretations of areas that are unclear?

Audit firms and financial statement preparers

Which type of accountant may perform accounting research before financial statements are issued in order to evaluate whether a company's financial statements are presented fairly in conformity with GAAP?

Auditor

Ideally, companies with sufficient resources will perform accounting research for a transaction at which time?

Before a transaction occurs

When can an entity recognize the benefit of a tax position?

Both statements are correct - more likely than not - tax position is effectively settled through examination by the taxing authority

Identify which of the following statements, regarding the Questions/Issues section of an issues memo, is/are true.

Both statements are true

To browse to the "Leases" topic, in which "Area" should your search begin?

Broad Transactions

What resource should a researcher consult in order to determine whether a cost should be recorded as an asset or expense? Assume that no topic-specific guidance is available for this issue in the Codification.

Conceptual Framework

Which of the following resources does not offer updates on a broad range of standard setters' activities? (such as the AICPA, PCAOB, FASB, IASB, and so on)?

FASB Action Alerts

True or False: Paraphrasing guidance from the Codification (that is, summarizing the guidance in your own words) is far more impactful in a memo than using actual excerpts from the Codification.

False

True or False: The FASB's Concepts Statements are considered authoritative guidance.

False

True or False: You should always include discussion of your scope review in your accounting issues memoranda.

False

True or False: When weighing alternative accounting treatments, a researcher should only consider authoritative sources of guidance.

False (ex-> checkpoint)

A group of executives attended a meeting in which the CFO was the attendee with the most senior ranking. When the meeting began, the CFO offered his views on the matter at hand, and the other meeting attendees expressed agreement with his approach. This scenario could be an example of which type of bias?

Group think bias

When two alternative accounting treatments are available for your transaction, but only one can be selected, it is a best practice to do which of the following?

Identify both alternatives, and present the merits and concerns related to each.

When does testing of property, plant, and equipment for impairment take place?

If circumstances (aka, triggering events) indicate that the carrying value of an asset or asset group may not be recoverable

The background section of an issues memo should do which of the following?

Include all relevant facts necessary to understand the transaction and its accounting.

Which of the following is not a benefit of researching a proposed transaction?

It allows investors to research a company's choice of accounting methods before the transaction is finalized.

Before you even begin the research process, the book advocates that researchers begin with a "pre-step." What is this pre-step?

Learn about the client's business (industry).

What measurement attribute generally applies to the subsequent measurement of notes receivable?

Net realizable value

Is all SEC guidance contained within the Codification, and is SEC guidance considered authoritative?

No, not all SEC guidance is housed within the Codification; yes, it is considered authoritative for public companies only.

The discount rate adjustment technique and expected present value technique are techniques for measuring which of the following?

Present value

__________ companies issue financial statements because they are required to do so by the SEC. ____________ companies may issue financial statements as necessary to satisfy the requirements of their investors, lenders, and other stakeholders.

Public Private

Which type of accountant may perform accounting research in order to understand the accounting positions of the companies or industries his or her agency oversees, and may send comment letters to the extent he or she questions a given position?

Regulator

The _________ gave the SEC _______________ authority to establish accounting standards.

Securities Exchange Act of 1934 statutory

Which of the following reflects the correct chronological order of historical and current standard setters?

The SEC was first granted authority, then the Committee on Accounting Procedure (CAP), then the Accounting Principles Board (APB), and now the Financial Accounting Standards Board (FASB).

Fair value is defined as which of the following? (Read each choice carefully!)

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

Which of the following statements is true?

The timing of subsequent measurements can vary based on the asset or liability being measured.

Which of the following is not a strategy for overcoming biases?

These are all strategies for over coming basis

In 2009, when the Codification was populated with original accounting standards, what happened to these original standards?

They were superseded and became nonauthoritative.

True or False: An important step when creating content for a presentation is to picture your audience.

True

True or False: Guidance in the Codification applies to both public and nonpublic companies.

True

True or False: In cases where SEC guidance doesn't fit neatly within a specific Codification section (e.g., S-25 for Recognition, or S-30 for Measurement), this guidance may be located within the S-99 section of the Codification.

True

True or False: It's common for researchers to refine their research questions as they work through the research process.

True

True or False: The SEC views itself—first and foremost—as a law enforcement agency.

True

True or False: The chapter generally recommends that researchers should think through accounting issues on their own before turning to the Codification for guidance.

True

Which of the following is not a circumstance in which a presentation might be given in practice?

You ask your colleague, in the next cubicle, for input regarding a research question you are researching.

Nonauthoritative guidance is

any source of accounting guidance or practice not included within the FASB Codification (SEC guidance excepted).

Guidance within the scope section may

be presented in either of the above manors -list transactions that are in and out of scope -contain tests to determine what is in and out of scope

The book introduces the concept of a guidance sandwich. This means that

commentary in your own words should precede and follow all guidance excerpts.

The chapter argues that the most effective group presentations are the ones where

each group member believes that he or she is responsible for the quality of the whole presentation, not just his or her own part.

A key question in evaluating whether an award to a company's board member is within the scope of ASC 718 (Stock Compensation) is determining whether the board member meets the definition of

employee

Which of the following is another name for a proposed standard (or a proposed Accounting Standards Update)?

exposure draft

When ASC 820 (Fair Value Measurement) is consulted, it should be considered ________ any topic-specific measurement guidance.

in addition to

Changes in an asset or liability's fair value may be recorded

in income or OCI, depending on the asset or liability.

An Accounting Standards Update

is not authoritative. It serves only to update the authoritative Codification.

Which level of the fair value hierarchy reflects the use of observable, quoted market price inputs?

level 1

What measurement attribute generally applies to the subsequent measurement of inventory?

lower of cost or market

Historical cost, net realizable value, present value, fair value, and replacement cost are all examples of

measurement attributes

A(n) ____________ subsequent event provides additional evidence about conditions existing at the balance sheet date.

recognized

The sale of bonds in January by a calendar year-end company is a(n)

unrecognized

Recognition guidance within a topic tells you

what, when, and how to record an item.

Scope guidance within a topic tells you

whether the guidance in a particular topic applies to a transaction.

Generally speaking, a researcher should begin his or her search for measurement guidance

within individual Codification topics, sections 30 and 35.