Exam Prep For;
Intermediate Accounting
** Expert-Verified Explanation
** Questions with Verified Answer
** New Edition |Updated
** Guaranteed Pass
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, Financial Accounting *The process that culminates in the preparation of financial reports on the
enterprise for use by both internal and external parties.
Objective of Financial Reporting Provide information about the reporting entity that is useful to present and
potential to equity investors, lenders, and others.
Securities and Exchange Commission (SEC) -Federal agency developed to help develop and standardize financial information
presented to stockholders
-Companies that issue securities to public are required to file with SEC
-Have powers to prescribe auditing practices and standards to be employed by
companies that fall within its jurisdiction
-Requires registrants to adhere to GAAP
-Relies on FASB to develop accounting standards
-Mission to protect investors, maintain fair, orderly, and efficient markets, and
facilitate capital formation
-Regulations require filing of annual (10-K) & quarterly (10-Q) reports and others
-Enforcement authority
American Institute of CPAs (AICPA) -National professional org of CPAs
-Important to development of GAAP
-Established the Committee on Accounting Procedure (CAP) → Accounting
Principles Board (APB) → FASB
Financial Accounting Standards Board (FASB) -Major organization of the standard-setting structure for financial accounting
-Wants to establish and improve standards of financial accounting and reporting
for the guidance and education of the public
-Accounting guidance issued by FASB is considered GAAP
-Issues: Accounting standards updates & financial accounting concepts
Generally Accepted Accounting Principles (GAAP) common set of accounting standards and procedures for which either an
authoritative accounting rule making body has established a principle of reporting
in a given area, or over time, a given practice has been accepted as appropriate
because of its universal application
FASB Codification -Provides all the authoritative literature related to a particular topic in one place
-Topic → subtopics → sections → paragraphs
Major Challenges in Financial Reporting GAAP is as much a product of political action as it is of careful logic or empirical
findings
Measurement Principle Historical cost and fair value
Revenue Recognition Principle Requires companies recognize revenue in the period performance obligation is
satisfied.
Expense Recognition Principle Expenses follows the revenues.
Full Disclosure Principle Providing information that is of sufficient importance to influence the judgement
and decisions of an informed user (financial statements, notes to the statements,
supplementary information).
Two Perspectives of Time 1. Date (point in time): "as of"; balance sheet
2. Time between two dates (period): "for the year ended"; income statement,
cash flow
Intermediate Accounting
** Expert-Verified Explanation
** Questions with Verified Answer
** New Edition |Updated
** Guaranteed Pass
** 100% Correct Answers | Graded A+
, Financial Accounting *The process that culminates in the preparation of financial reports on the
enterprise for use by both internal and external parties.
Objective of Financial Reporting Provide information about the reporting entity that is useful to present and
potential to equity investors, lenders, and others.
Securities and Exchange Commission (SEC) -Federal agency developed to help develop and standardize financial information
presented to stockholders
-Companies that issue securities to public are required to file with SEC
-Have powers to prescribe auditing practices and standards to be employed by
companies that fall within its jurisdiction
-Requires registrants to adhere to GAAP
-Relies on FASB to develop accounting standards
-Mission to protect investors, maintain fair, orderly, and efficient markets, and
facilitate capital formation
-Regulations require filing of annual (10-K) & quarterly (10-Q) reports and others
-Enforcement authority
American Institute of CPAs (AICPA) -National professional org of CPAs
-Important to development of GAAP
-Established the Committee on Accounting Procedure (CAP) → Accounting
Principles Board (APB) → FASB
Financial Accounting Standards Board (FASB) -Major organization of the standard-setting structure for financial accounting
-Wants to establish and improve standards of financial accounting and reporting
for the guidance and education of the public
-Accounting guidance issued by FASB is considered GAAP
-Issues: Accounting standards updates & financial accounting concepts
Generally Accepted Accounting Principles (GAAP) common set of accounting standards and procedures for which either an
authoritative accounting rule making body has established a principle of reporting
in a given area, or over time, a given practice has been accepted as appropriate
because of its universal application
FASB Codification -Provides all the authoritative literature related to a particular topic in one place
-Topic → subtopics → sections → paragraphs
Major Challenges in Financial Reporting GAAP is as much a product of political action as it is of careful logic or empirical
findings
Measurement Principle Historical cost and fair value
Revenue Recognition Principle Requires companies recognize revenue in the period performance obligation is
satisfied.
Expense Recognition Principle Expenses follows the revenues.
Full Disclosure Principle Providing information that is of sufficient importance to influence the judgement
and decisions of an informed user (financial statements, notes to the statements,
supplementary information).
Two Perspectives of Time 1. Date (point in time): "as of"; balance sheet
2. Time between two dates (period): "for the year ended"; income statement,
cash flow
