ACT 6692 Module 7 Lecture Questions

ACT 6692 Module 7 Lecture Questions - ACT 6692 Advanced...

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ACT 6692 Advanced Accounting Problems Lecture Questions Module # 7 www.wiley.com/cpa Background: Intermediate Accounting www.wiley.com/college/kieso Kieso, Weygandt & Warfield (2007) Chapters 1 – 5, 18 & 22 www.fasb.org www.aicpa.org www.sec.gov www.iasb.org Part One – Obtain a Conceptual Understanding A. Basic Concepts Pages 41 – 57 1. What is generally accepted accounting principles (GAAP)? GAAP is the conventions, rules, and procedures necessary to define accepted practice at a particular time. 2. Identify the major authoritative pronouncements that establish GAAP. 3. What is the difference between Statements of Financial Accounting Standards (SFAS) and Statements of Financial Accounting Concepts (SFAC)? SFAS: authoritative SFAC: is the framework to set forth fundamentals on which financial accounting and reporting standards will be based. 4. What is the scope of Financial Reporting? Financial reporting includes not only financial statements but also other means of communicating information that relates, directly or indirectly, to the information provided by a business enterprise’s accounting system – that is, information about an enterprise’s resources, obligations, earnings, etc. 5. What is the purpose of the FASB’s Conceptual Framework? To assist standard setters in developing and revising accounting standards.
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6. According to SFAC 1, what are the three objectives of financial reporting? SFAC 1 Objectives of Financial Reporting Pages 1022 – 1023 The three objectives of financial reporting are: Provide information useful in investment and credit decisions Provide information useful in assessing cash flow prospects (amount, timing, and uncertainty) Provide information about enterprise resources, claims to those resources, and changes therein 7. According to SFAC 2, what are the two primary qualities to ensure decision usefulness of information? Be sure to define each quality. SFAC 2 Qualitative Characteristics Pages 1023 – 1024 The two primary qualities to ensure decision usefulness of information are: Relevance: “capacity” of information to “make a difference” in a decision Reliability: freedom from error and bias and faithful representation of what is claimed to be represented 8. According to SFAC 2, what are the two secondary qualities to facilitate the assessment of cash flows? Be sure to define each quality.
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ACT 6692 Module 7 Lecture Questions - ACT 6692 Advanced...

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