Midterm Review

Midterm Review - Jesica Islas Intermediate Accounting 1...

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Jesica Islas Intermediate Accounting 1 January 30, 2007 Professor A. Wu Chapter 1 Midterm Review Characteristics of Accounting Essential characteristics of accounting are: 1. the identification, measurement, and communication of financial information about 2. economic entities to 3. interested parties (internal vs. external) Challenges Facing Financial Accounting Non-financial Measurements Forward-looking Information Soft Assets Timeliness Objectives of Financial Accounting Financial reporting should provide information: (a) That is useful to present and potential investors and creditors and other users in making rational investment, credit, and similar decisions. (b) To help present and potential investors and creditors and other users in assessing the amounts, timing, and uncertainty of prospective cash receipts. (c) About the economic resources of an enterprise, the claims to those resources, and the effects of transactions, events, and circumstances that change its resources and claims to those resources Securities and Exchange Commission Established by federal government Accounting and reporting for public companies Encouraged private standard-setting body SEC requires public companies to adhere to GAAP SEC Oversight Enforcement Authority American Institute of CPAs National professional organization Established the following: Securities Act of 1933 Securities Act of 1934
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Intermediate Accounting 1 January 30, 2007 Professor A. Wu Chapter 1 Financial Accounting Standards Board Wheat Committee’s recommendations resulted in the creation of the Financial Accounting Standards Board in 1973. Financial Accounting Standards Board (http://www.fasb.org/) Mission is to establish and improve standards of financial accounting and reporting. Differences between FASB and APB include: Smaller Membership Full-time, Remunerated Membership Greater Autonomy Committee on Accounting Procedures 1939 to 1959 Issued 51 Accounting Research Bulletins (ARBs) Problem-by-problem approach failed Committee on Accounting Procedures 1959 to 1973 Issued 31 Accounting Principle Board Opinions (APBOs) Wheat Committee recommendations adopted in 1973 Financial Accounting Foundation Financial Accounting Standards Board Financial Accounting Standards Advisory Council Select members of the FASB Funds their activities Exercises general oversight. Mission to establish and
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Midterm Review - Jesica Islas Intermediate Accounting 1...

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