Asset Exam 1 Notes - ASSET ACCOUNTING QUIZ 1 Chapter 1 THE...

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he House of GAAP ASB AICPA ASSET ACCOUNTING QUIZ 1 Chapter 1 THE OBJECTIVES OF FINANCIAL REPORTING ARE: 1. Usefu l in investment and credit decisions— reasonable understanding of business 2. Useful in assessing cash flow prospect—assess amounts/ timing 3. Assessing company resources and claims to those resources— economic entity resources and claims Also he said to remember; Key words in the objectives: 1. Presented to Creditors, Investors and Others for decisions of financial reporting to people with a reasonable understanding of the economic entity. 2. Assess the amounts of cash of timing and cash receipts from creditors and investors. 3. Assessing for Creditors, Investors and Others for the resources and claims of the economic entity. Characteristics of Accounting 1. Identification, measurement, and communication of financial information 2. Measures the economic entity 3. Communicates to interested parities Challenges Facing Financial Accounting 1. Non-financial Measurements 2. Forward-looking Information 3. Soft Assets—also called intangible assets 4. Timeliness The Need to Develop Standards
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ASSET ACCOUNTING QUIZ 1 1. Whose rules should we play by and why? Parties Involved in Standard Setting 1. SEC -Securities and Exchange Commission-they oversee accounting and reporting for public companies—Lets FASB write the standards. Require public companies to follow GAAP . Enforce Authority. 2. AICAP —American Institute of Certified Public Accountants— they give the CPA exam--They established: a. CAP— Committee on Accounting Procedures—they do Accounting Research Bulletins. This Committee Failed to provide structure so the AICPA developed: b. APB— Accounting Principles Board—they do Opinions—this did not work so the AICPA created; c. FASB —Financial Accounting Standards Board—they do Standards for the SEC—also they formed FASAC who is Financial Accounting Standards Advisory Council who helps with major policy. Due Process Steps for Standards 1. Agenda—what are they addressing 2. Public Hearing—on proposed standard 3. Exposure Draft—the board evaluates research and public response and issues the Exposure Draft 4. FASB Standard put in place FASB Issues 3 types of Pronouncements 1. Standards —are GAAP issued by FASB-- Interpretations modify and extend existing standards-- and Staff Positions Interpretive guidance and minor amendments to standards and interpretations.
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ASSET ACCOUNTING QUIZ 1 2. Financial Accounting Concepts—framework that sets forth objectives and concepts that the Board uses in developing future standards 3. Emerging Issues Task Force Statement-- EITF
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