objective of financial reporting ~CORRECT ANSWER~✓✓provide
financial information about the reporting entity that is useful to present
and potential equity investors, lenders, and other creditors
general-purpose financial statements ~CORRECT
ANSWER~✓✓provide financial reporting information to a wide variety
of users
accrual basis accounting ~CORRECT ANSWER~✓✓ensures that a
company records events that change its financial statements in the
periods in which it receives or pays cash
generally accepted accounting principles (GAAP) ~CORRECT
ANSWER~✓✓common set of accounting standards and procedures:
Securities and Exchange Commission (SEC)
American Institute of Certified Public Accountants (AICPA)
Financial Accounting Standards Board (FASB)
Financial Accounting Standards Board ~CORRECT
ANSWER~✓✓establish and improve standards of financial accounting
and reporting for the guidance and education of the public which
includes issuers, auditors, and users of financial information
, Accounting Standards Updates ~CORRECT ANSWER~✓✓These
updates amend the Accounting Standards Codification, which
represents the source of authoritative accounting standards
Four primary financial statements ~CORRECT ANSWER~✓✓Balance
Sheet
Income Statement
Statement of Cash Flows
Statement of Owner's/Stockholders' Equity
Conceptual Framework ~CORRECT ANSWER~✓✓establishes the
concepts that underlie financial reporting.
Relevance (Fundamental Quality) ~CORRECT
ANSWER~✓✓accounting information must be capable of making a
difference in a decision. Financial information is capable of making a
difference when it has predictive value, confirmatory value, or both.
Predictive Value ~CORRECT ANSWER~✓✓if it has value as an input
to predictive processes used by investors to form their own expectations
about the future
Confirmatory value ~CORRECT ANSWER~✓✓relevant information
also helps users confirm or correct prior expectations
financial information about the reporting entity that is useful to present
and potential equity investors, lenders, and other creditors
general-purpose financial statements ~CORRECT
ANSWER~✓✓provide financial reporting information to a wide variety
of users
accrual basis accounting ~CORRECT ANSWER~✓✓ensures that a
company records events that change its financial statements in the
periods in which it receives or pays cash
generally accepted accounting principles (GAAP) ~CORRECT
ANSWER~✓✓common set of accounting standards and procedures:
Securities and Exchange Commission (SEC)
American Institute of Certified Public Accountants (AICPA)
Financial Accounting Standards Board (FASB)
Financial Accounting Standards Board ~CORRECT
ANSWER~✓✓establish and improve standards of financial accounting
and reporting for the guidance and education of the public which
includes issuers, auditors, and users of financial information
, Accounting Standards Updates ~CORRECT ANSWER~✓✓These
updates amend the Accounting Standards Codification, which
represents the source of authoritative accounting standards
Four primary financial statements ~CORRECT ANSWER~✓✓Balance
Sheet
Income Statement
Statement of Cash Flows
Statement of Owner's/Stockholders' Equity
Conceptual Framework ~CORRECT ANSWER~✓✓establishes the
concepts that underlie financial reporting.
Relevance (Fundamental Quality) ~CORRECT
ANSWER~✓✓accounting information must be capable of making a
difference in a decision. Financial information is capable of making a
difference when it has predictive value, confirmatory value, or both.
Predictive Value ~CORRECT ANSWER~✓✓if it has value as an input
to predictive processes used by investors to form their own expectations
about the future
Confirmatory value ~CORRECT ANSWER~✓✓relevant information
also helps users confirm or correct prior expectations
