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Related Flashcards
Cards In This Set
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Identify the major financial statemetns
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Balance sheet
Income statement Statement of Cash Flows Statement of owners' or stockholder equity |
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Essential characteristics of accounting
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1) identification, measurement & communication of financial info
2) about economic entities to 3) interested parties |
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Other means of financial reporting
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President's letter; supplementary schedule in corporate annual report; prospecti uses; reports filed with government agencies; news releases; management's forecasts; social or environmental impact statements
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Challenges facing financial accounting
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Nonfinancial measurements
forward-looking information soft assets timeliness |
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Objectives of financial reporting
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Is useful to present & potential investors & creditors & other users
1)making rational investment, credit & similar decisions 2) assess the amounts, timing & uncertainty of prospective cash receipts 3) clearly portrays economic resources of an enterprise & the claims to those resources |
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Explain need for accounting standards
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Creates general purpose financial statements that makes them comparable to other companies
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GAAP
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Generally Accepted Accounting Principles
a common set of standards & procedures |
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SEC
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Securities & Exchange Commission
1)government agency to develop & standardized financial info 2) encourage creation of private standard setting body 3) SEC requires registrants to adhere to GAAP |
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SEC Oversight
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SEC relies on the FASB to develop accounting standards
1) communicates problems to the FASB 2) responds to FASB exposure drafts 3) provides the FASB with counsel & advice upon request Enforcement companies listed on stock exchange must submit their financial statements to SEC |
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AICPA
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American Institute of Certified Public Accountants
Appointed CAP - issued 51 Accounting Research Bulletins CAP - Committee on Accounting Research composed of CPAs then created Accounting Principles Board |
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APB
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Accounting Principle Board
Major Purposes 1) advance written expression of accounting Principles 2) determine appropriate practices 3) narrow areas of difference & inconsistency Mission develop overall conceptual framework & reasearch issues before AICPA issued pronouncements issued 31 APB Opinions |
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Wheat Committee
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Examined APB & recommedned demise of APB creation of new structure of 3 organizations
FAF, FASB & FASAC |
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FAF
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Financial Accounting Foundation
selects members of FASB & advisory Council funds their activities & oversees FASB activities |
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FASB
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Financial Accounting Standards Board
Mission - establish & improve standards of financial accounting & reporting 1) smaller membership 2) full time Remunerated membership (5 years) 3) greater autonomy 4) increased indpendence 5) broader Representation Relies on expertise of task force groups from FASAC |
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FASAC
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Financial Accounting Standards Advisory CouncilF
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