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