1. The objective of general-purpose financial reporting is to provide financial
information about the reporting entity that is useful to present and potential
equity investors, lenders, and other creditors in decisions about providing
resources to the entity.: What is the objective of general-purpose financia
reporting?
2. General-Purpose financial statements are prepared primarily for external
users. They provide financial reporting information to a wide variety of users
-- shareholders, creditors, suppliers, employees, and regulators. General
purpose financial statements provide at the least cost the most useful
information possible.: What are "general-purpose financial statements?"
Prepared primarily for?
3. The objective of financial reporting identifies investors and creditors as
the PRIMARY users for general-purpose financial statements. It places the
most emphasis on reporting to these capital provides.
As part of the objective of general-purpose financial reporting an entity
perspective is adopted.: What are "general-purpose financial statements?"
Primary users are?
4. The SEC(Securities and Exchange Commission) is a federal agency and
administers the Securities Exchange Act of 1934. IT has broad powers to
prescribe the accounting practices and standards to be employed by
companies that fall within its jurisdiction(publicly held companies/listed on a
stock exchange - over 12,000 currently).: What does the SEC have the power to
do with respect to companies falling within its jurisdiction?
5. 1. Committee on Accounting Procedure(CAP) issued 51 Accounting
Research Bulletins(ARBs) that narrowed the wide range of alternative
accounting practices then in existence. However it was a problem by problem
approach and not a structured body of principles.
2. Accounting Principles Board(APB) mission was to develop a framework
and to research individual issues before the AICPA issued pronouncements.
They appointed the Wheat Committee to deflect any government
interference. In 1973, it was replaced by the FASB.: Who were the
AICPA(American Institute of Certified Public Accountants) organizations that
preceded the current FASB organization and what were the names of the
documents issued by each?
6. 1. Smaller membership(7 versus 18-21 on the APB)
1/9
, Accounting Quiz 1 (Chapter 1 and 2) 2024
2. Full Time remunerated membership(APB members were unpaid and part-
time/now paid big bucks)
3. Greater Autonomy (APB was a senior committee of the AICPA)
4. Increased Independence(FASB members must sever all ties with firms,
companies, and institutions)
5. Broader representation(It is not necessary to be a CPA to be a member of
the FASB): In what ways does the FASB differ from its immediate predecessor
(the APB)?
7. Due Process System gives interested persons ample opportunity to make
their views known.: What is meant by the "due process" system?
8. 1. Research
2. Discussion Paper
3. Exposure Draft
4. Standard: What is the order of the primary steps for due process?
9. The passage of new FASB guidance in the form of an Accounting
Standards Update requires the support of 4 of the 7 board members.:
How many FASB members must support the passage of an Accounting
Standards Update?
10. 1. Accounting Standards Updates
2. Financial Accounting Concepts
These updates amend the Accounting Standards Codification which
represents the source of authoritative accounting standards other than
those issued by the SEC.: What are the two major types of pronouncements
issued by the FASB?
11. Generally Accepted Accounting Principles are those principles that have
substantial authoritative support.: Define GAAP.
12. GAAP is composed of a mixture of over 2,000 documents that have
developed over the last 70 years that includes the FASB standards, APB
opinions, and Accounting Research Bulletins. It also issued
interpretations and FASB Staff Positions that modified or extended
existing standards.: What documents comprise GAAP?
13. PAGE 7
The FASB's primary goal in developing the Financial Accounting Standards
Codification was to *provide in one place all the authoritative literature related
to a particular topic.* It creates ONE level of GAAP which is considered
authoritative.
2/9
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller KINGNOTES1. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $15.99. You're not tied to anything after your purchase.
