Acctg 330 Ch1

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1. Distinguish among Accounting Principles board issues 7. In what ways was The membership was smaller, the
Accounting research opinions between 1959 and 1973 that it felt that the members of the FASB were renumerated
bulletins, opinions of were intended to be based on statements issued for their work and it was a full time job
the accounting research studies and supported by by the Financial meaning they didn't work for an
principles board, and reason and analysis. Accounting accounting firm at the same time. The
and statements of Standards Board FASB was answerable only to the FAF
the financial would carry meaning they had greater freedom.
accounting greater weight There was broader representation in the
standards board than the opinion FASB because members were not
issued by the required to be CPAs
2. Distinguish between Standards issued by the board are
Accounting
FASB statements of considered Generally accepted
Principles Board?
financial accounting accounting principles ,and concepts
standards and FASB are not considered GAAP but are part 8. Of what value is a Very important because the users of
statements of of the boards goal to establish a common set of financial statements must have trust that
financial accounting framework to deal with all accounting standards in the financial documents they rely on
concepts problems. financial were prepared in good faith and are
accounting and comparable to one and another. Without
3. For what purposes 1) advance the written expression of
reporting? that people stop investing and business
did the AICPA in accounting principles
and the economy in general suffer. Also
1959 create the 2) determines the appropriate
by having a general set each user does
accounting practices
not have to familiarize themselves with
principles board? 3) narrow the differences and
the specific way that company prepares
inconsistency in practice
their documents
In order to do this they sought to 9. What are the most 1) The balance sheet
develop an overall conceptual frequently uesd 2) the income statement
framework to assist in the resolution of financial 3) The statement of cash flows
problems as they become evident and statements 4) the statement of owners or
to substantively research individual stockholders equity
issues before they issued
10. What is financial the process that culminates in the
pronouncements on how to deal with
accounting preparation of financial reports on the
them
enterprise for use by both internal and
4. How are FASB ... external parties
preliminary views
11. What is the process of identifying, measuring,
and GASB exposure
managerial analzying and communicating financial
drafts related to
accounting information needed by management to
FASB statements?
plan, control, and evaluate a company's
5. How does Accounting provides, reliable, operations
accounting help the relevant, and timely information to
12. What is rule 203 ...
capital allocation managers, investors and creditors to
of the code of
process? allow resource allocation to the most
professional
efficient enterprises. Accounting also
conduct?
provides measurements of efficiency
(profitability) and financial soundness 13. What is the Financial accounting prepares financial
difference documents primarily for the use of
6. In what ways is the It is a federal agency so it has enough
between financial outside users such as lendors and
securities and power to presecribe in whatever
and managerial creditors while managerial accounting
exchange detail it desires the accounting
accounting focuses on preparing timely reports that
commission standards to be employed by
can assist internal users in making good
concerned about companies that fall within it's
decisions.
and supportive of jurisdiction. They usually accomplish
accounting this by prodding the FASB to do
principles and research in a area or put together a
standards? report on an unclear area
14. What is the Financial reporting is the process of 20. What was the It was a committee put together by the
difference providing information about the reporting committee on AICPA by the urging of the SEC. It was
between entity to potential and current investors, accounting made up of 51 CPA's they issued 51
financial lendors, and other creditors. Financial procedure and accounting research bulletins which dealt
statements and statements are the channel through which what were its with a variety of accounting problems.
financial this information is relayed accomplishments Their failings were that they dealt with
reporting and failings? accounting problems as they popped up
and failed to give structured rules that
15. What is the They provide general information about the
the accounting body really needed.
likely limitation company that appeal to a broad audience.
of gneeral There are many different types of people
puprose looking at these documents though and
financial therefore they are looking for a broad range
statements? of information and these documents cannot
supply exactly the right information to this
diverse of a group
16. What is the WHen making decisions investors are
meaning of interested in assessing
decision 1) the company's ability to generate net
usefulness in cash inflows
the context of 2) management's ability to protect and
financial enhance the capital providers investment
accounting? FInancial reporting should therefore help
investors assess the amount, timing, and
uncertainty of prospective cash inflows .
Financial statements are the primary source
for determining this information.
17. What is the to provide financial information about the
objective of reporting entity that is useful to current and
financial future equity investors, lenders, and
reporting? creditors in decisions about providing
resources to the entity through equity
investments and loans or other forms of
credit.
18. What is the to provide financial information about the
objective of reporting entity that is useful to present and
financial potential equity investors, lenders, and
reporting other creditors
19. What three 1. Securities and Exchange Commission
organizations (SEC)
are 2) American Institute of Certified Public
instrumental in Accountants (AICPA)
the 3) FInancial Accounting Standards Board
development (FASB)
of financial
accounting
standards
(GAAP) in the
US