FDIC Accounting Test: Practice Questions, Answers & Exam Preparation Guide
financial accounting - ANS ✔✔the process that culminates in the preparation of financial
reports on the enterprise for use by both internal and external parties
managerial accounting - ANS ✔✔The process of identifying, measuring, analyzing, and
communicating financial information needed by management to plan, control, and evaluate a
company's operations.
financial statements - ANS ✔✔The principal means through which a company communicates its
financial information
financial reporting - ANS ✔✔Other means beside financial statements through which financial
information is provided. Includes president's letter, supplementary schedules in the corporate
annual report, prospectuses, reports filed with gov't agencies, news releases, forecasts, and
social/environmental impact statements
objective of financial reporting - ANS ✔✔to provide financial information about the reporting
entity that is useful to present and potential equity investors, lenders, and other creditors in
decisions about providing resources to the entity
general purpose financial statements - ANS ✔✔provide financial reporting information to a
wide variety of users; provide at the least cost the most useful information possible
entity perspective - ANS ✔✔companies are viewed as separate and distinct from their owners
proprietary perspective - ANS ✔✔a perspective that financial reporting should be focused only
on the needs of shareholders; is not considered appropriate
,decision usefulness approach - ANS ✔✔through financial reporting, Investors assess the
company's ability to generate net cash inflows and management's ability to protect and
enhance the capital providers' investments
accrual basis accounting - ANS ✔✔ensures that a company records events that change its
financial statements in the periods in which the events occur, rather than only in the periods in
which it receives or pays cash
GAAP (Generally Accepted Accounting Principles) - ANS ✔✔The standards and rules that
accountants follow while recording and reporting financial activities.
SEC
AICPA
FASB - ANS ✔✔The three organizations that are instrumental in the development of GAAP
SEC (Securities and Exchange Commission) - ANS ✔✔Federal agency with authority to regulate
trading practices in stocks and bonds
-requires registrants to adhere to GAAP
-relies on the FASB to develop accounting standards
AICPA (American Institute of Certified Public Accountants) - ANS ✔✔national professional
organization of practicing CPAs; an important contributor to the development of GAAP
CAP (Committee on Accounting Procedure) - ANS ✔✔Created by the AICPA, issued 51
Accounting Research Bulletins from 1939-1959
APB (Accounting Principles Board) - ANS ✔✔Replaced CAP; issued 31 APB Opinions
-advanced written expression of accounting principles
-determined appropriate practices
, -narrowed areas of difference and inconsistency in practice
Wheat Committee - ANS ✔✔Study Group on Establishment of Accounting Principles, chaired by
Francis Wheat, that examined the organization and operation of the APB and determined the
changes needed to attain better productivity and more timely correction of accounting abuses.
Submitted its recommendations to the AICPA Council in the spring of 1972, which led to the
replacement of the APB with FASB in 1973
AcSEC (Accounting Standards Executive Committee) - ANS ✔✔Established in 1973, after the
creation of FASB, this committee is authorized to speak for the AICPA in the area of financial
accounting and reporting.
FAF (Financial Accounting Foundation) - ANS ✔✔An organization whose purpose is to select
members of the FASB and its Advisory Councils, fund their activities, and exercise general
oversight.
FASB (Financial Accounting Standards Board) - ANS ✔✔establishes and improves standards of
financial accounting and reporting for the guidance and education of the public
FASAC (Financial Accounting Standards Advisory Council) - ANS ✔✔consults with FASB on major
policy and technical issues, and also helps select task force members
financial accounting standards - ANS ✔✔Pronouncements issued by the FASB which are
considered generally accepted accounting principles
accounting standards updates - ANS ✔✔accounting pronouncements issued by FASB that
amend the Accounting Standards Codification, which represents the source of authoritative
standards other than standards issued by the SEC
financial accounting - ANS ✔✔the process that culminates in the preparation of financial
reports on the enterprise for use by both internal and external parties
managerial accounting - ANS ✔✔The process of identifying, measuring, analyzing, and
communicating financial information needed by management to plan, control, and evaluate a
company's operations.
financial statements - ANS ✔✔The principal means through which a company communicates its
financial information
financial reporting - ANS ✔✔Other means beside financial statements through which financial
information is provided. Includes president's letter, supplementary schedules in the corporate
annual report, prospectuses, reports filed with gov't agencies, news releases, forecasts, and
social/environmental impact statements
objective of financial reporting - ANS ✔✔to provide financial information about the reporting
entity that is useful to present and potential equity investors, lenders, and other creditors in
decisions about providing resources to the entity
general purpose financial statements - ANS ✔✔provide financial reporting information to a
wide variety of users; provide at the least cost the most useful information possible
entity perspective - ANS ✔✔companies are viewed as separate and distinct from their owners
proprietary perspective - ANS ✔✔a perspective that financial reporting should be focused only
on the needs of shareholders; is not considered appropriate
,decision usefulness approach - ANS ✔✔through financial reporting, Investors assess the
company's ability to generate net cash inflows and management's ability to protect and
enhance the capital providers' investments
accrual basis accounting - ANS ✔✔ensures that a company records events that change its
financial statements in the periods in which the events occur, rather than only in the periods in
which it receives or pays cash
GAAP (Generally Accepted Accounting Principles) - ANS ✔✔The standards and rules that
accountants follow while recording and reporting financial activities.
SEC
AICPA
FASB - ANS ✔✔The three organizations that are instrumental in the development of GAAP
SEC (Securities and Exchange Commission) - ANS ✔✔Federal agency with authority to regulate
trading practices in stocks and bonds
-requires registrants to adhere to GAAP
-relies on the FASB to develop accounting standards
AICPA (American Institute of Certified Public Accountants) - ANS ✔✔national professional
organization of practicing CPAs; an important contributor to the development of GAAP
CAP (Committee on Accounting Procedure) - ANS ✔✔Created by the AICPA, issued 51
Accounting Research Bulletins from 1939-1959
APB (Accounting Principles Board) - ANS ✔✔Replaced CAP; issued 31 APB Opinions
-advanced written expression of accounting principles
-determined appropriate practices
, -narrowed areas of difference and inconsistency in practice
Wheat Committee - ANS ✔✔Study Group on Establishment of Accounting Principles, chaired by
Francis Wheat, that examined the organization and operation of the APB and determined the
changes needed to attain better productivity and more timely correction of accounting abuses.
Submitted its recommendations to the AICPA Council in the spring of 1972, which led to the
replacement of the APB with FASB in 1973
AcSEC (Accounting Standards Executive Committee) - ANS ✔✔Established in 1973, after the
creation of FASB, this committee is authorized to speak for the AICPA in the area of financial
accounting and reporting.
FAF (Financial Accounting Foundation) - ANS ✔✔An organization whose purpose is to select
members of the FASB and its Advisory Councils, fund their activities, and exercise general
oversight.
FASB (Financial Accounting Standards Board) - ANS ✔✔establishes and improves standards of
financial accounting and reporting for the guidance and education of the public
FASAC (Financial Accounting Standards Advisory Council) - ANS ✔✔consults with FASB on major
policy and technical issues, and also helps select task force members
financial accounting standards - ANS ✔✔Pronouncements issued by the FASB which are
considered generally accepted accounting principles
accounting standards updates - ANS ✔✔accounting pronouncements issued by FASB that
amend the Accounting Standards Codification, which represents the source of authoritative
standards other than standards issued by the SEC
