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Cards In This Set
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The essential characteristics of accounting are:
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The identification, measurement and communication of financial info about economic entities to interested parties
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Financial Accounting is
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The process that culminates in the preparation of financial reports on the enterprise for use by both internal and external parties
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Users of financial statements can be:
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Investors, creditors, managers, unions, and government agencies
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The financial statements most frequently provided are:
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The balance sheet, the income statement, the statement of cash flows, the statement of owner's equity
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Name some challenges facing financial accounting
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1.nonfinancial measurements
2. forward-looking info
3. soft assets
4. timeliness
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Financial reporting should provide info that:
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Is useful in investment and credit decisions, in assessing cash flows and about company resources, claims to those resources and changes in them
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The common set of standards and principles for accounting are called:
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GAAP
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What four organizations help to create GAAPs?
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SEC, AICPA, FASB, GASB
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Securities and Exchange Commission (SEC)
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A federal agency created after the stock market crash in 1929 to help develop and standardize financial info presented to stockholders.
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American Institute of Certified Public Accountants (AICPA)
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Private sector that was formed due to the SEC; creates standards
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What is the mission of the financial accounting standards board?
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To establish and improve standards of financial accounting and reporting for the guidance and education of the public
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Why does FASB work better than the APB?
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Smaller membership, full-time remunerated membership, greater autonomy, increased independence, broader representation
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The FASB issues what major 3 types of pronouncements?
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1. Standards, interpretations, staff positions
2. financial accounting concepts
3. emerging issues task force statements
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Standards are
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GAAP (must have 4 of 7 votes)
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Interpretations
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Modify or extend existing standards (require same votes for passage as standards)
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