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CPA Exam (Becker F1) Questions and Answers
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CPA Exam (Becker F1)
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CPA Exam (Becker F1)Who has the legal authority to establish U.S. GAAP? - answer The SEC
The SEC was established by the _________________. - answer Securities Exchange
Act of 1934
How many board members does the FASB have? How long can they serve on the
board? - answer The FASB has seven full-time members who serve for five-year terms
and may be reappointed to one additional five-year term.
What is the Committee on Accounting Procedures (CAP)? - answer The CAP was a
part-time committee of the AICPA that promulgated Accounting Research Bulletins
(ARBs), which determined GAAP from 1939 - 1959.
What is the Accounting Principles Board? - answer The APB was a part-time committee
of the AICPA that issued opinions (APBOs) and interpretations (APBIs), which
determine GAAP from 1959 - 1973.
What is the FASB? - answer The FASB is an independent full-time organization that
was established in 1973 and has determine GAAP since then.
T or F: If it's not in the FASB Accounting Standards Codification, it's not GAAP. -
answerT
The codification is comprised of the following literature (hint: FEDPRIA): - answer1.
Financial Accounting Standards Board (FASB)
2. Emerging Issues Task Force (EITF) Abstracts and Topic D
3. Derivative Implementation Group Issues
4. Accounting Principles Board Opinions
5. Accounting Research Bulletins
6. Accounting Interpretations
7. American Institute of Certified Public Accountants (AICPA)
What SEC Standards are included in the Codification (hint: Regulation For Accounting I-
S Emerging)? - answer1. Regulation S-X
2. Financial Reporting Releases (FRR)
3. Accounting Series Releases (ASR)
4. Interpretive Releases (IR)
5. Staff Accounting Bulletins (SAB)
6. EITF Topic D and SEC Staff Observer Comments
,What is the goal of the Private Company Council? - answerTo establish alternatives to
U.S. GAAP, where appropriate, and to make private company financial statements more
relevant, less complex, and cost-beneficial.
Who created the Private Company Council? - answerThe Financial Accounting
Foundation (FAF)
T or F: The FASB updates the Accounting Standards Codification for new U.S. GAAP
issued by the FASB and for amendments to the SEC content with Accounting
Standards Updates. These Accounting Standards Updates are authoritative literature. -
answerF: Accounting Standards Updates are NOT authoritative literature. They provide
background information, update the code, and describe the basis for conclusions on
changes in the code.
The International Accounting Standards Board (IASB) was established in ___________
as part of the ______________. - answer2001, International Financial Reporting
Standards (IFRS) Foundation
What is the purpose of the IASB? - answerTo develop a single set of high-quality,
GLOBAL accounting standards.
In addition to the IASB, the IFRS Foundation sponsors the ______________. -
answerInternational Financial Reporting Interpretations Committee (IFRIC).
What does the IFRIC do? - answerThe IFRIC provides guidance on newly identified
financial reporting issues not addressed in the IFRSs and assists the IASB in achieving
international convergence of accounting standards.
What does the term International Financial Reporting Standards encompass? -
answerInternational Financial Reporting Standards, International Accounting Standards,
and Interpretations developed by the IFRIC and the former SIC.
The IASB is developing the Conceptual Framework for Financial Reporting, which does
what? - answerThe Conceptual Framework for Financial Reporting describes the basic
concepts that underlie the preparation and presentation of financial statements for
EXTERNAL USERS.
What was the goal of the international convergence of accounting standards between
the IASB and the FASB? - answerThe goal was a single set of high-quality, international
accounting standards that companies could use for both domestic and cross-border
financial reporting.
An IFRS must be approved by at least __________ members of the ___________. -
answer9, IASB
, T or F: Both the IFRS Conceptual Framework and U.S. GAAP Conceptual Framework
can and should be applied to specific accounting issues. - answerF: Under IFRS,
entities should consider applicability of the Framework. Under U.S. GAAP, the
Framework CANNOT be applied to specific accounting issues.
The Conceptual Frameworks Underlying Financial Accounting are also known as
____________. - answerbasic reasoning
Who created the conceptual framework underlying financial accounting in the U.S.? -
answerThe FASB
What is the purpose of the conceptual framework created by the FASB? - answerIt
serves as a BASIS FOR ALL FASB PRONOUNCEMENTS.
The conceptual framework created by the FASB is set forth in pronouncements called
_______________. - answerStatements of Financial Accounting Concepts (SFAC)
Are SFAC GAAP? - answerNo, but they provide a basis for GAAP.
What is the objective of general purpose financial reporting? - answerThe purpose of
general purpose financial reporting is to provide financial information about the reporting
entity that is USEFUL to the PRIMARY USERS in MAKING DECISIONS about
providing resources to the reporting entity.
In other words, the purpose is to disclose the entity's performance.
Who are the primary users of general purpose financial reports? - answerThe primary
users of general purpose financial reports are external. They are existing and potential
investors, lenders, and other creditors.
Financial information provided in general purpose financial reports is designed to
___________. - answermeet "informational needs"
What are the fundamental qualitative characteristics of useful financial information? -
answer1. Relevance
2. Faithful representation
What does it mean for financial information to be relevant? - answerFinancial
information is relevant if it is capable of making a difference in the decisions made by
users.
To be relevant, financial information must have _____________ and/or
______________, and must be ______________. - answerpredictive value, confirming
value, material
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