1

Question 1

what is the financial information provided in general purpose FR’s (4)?

Answer 1

(1) claims against entity
(2) resources of entity
(3) CHANGES of resources + claims
(4) how efficiently and effectively the entity’s mgt and governing board have discharged their responsibilities

Question 2

what is the single source of US GAAP that public companies are required to follow?

Answer 2

the FASB ASC

Question 3

(5) elements of PV measurement are:

Answer 3

1. Price for bearing uncertainty
2. expectations about timing variations of FCF’s
3. other factors (liquidity issues + mkt imperfections)
4. TVM (risk-free rate of int.)
5. est. FCF’s

Question 4

the diff. b/w managerial and financial accounting is:

Answer 4

Managerial does not follow GAAP

Question 5

Enhancing characteristics of relevance and faithful representation is:

Answer 5

“C-VUT”:

comparability, verifiability, understandability, and timeliness

Question 6

monetary unit assumption

Answer 6

• money is common denominator

* provides an appropriate basis for acct measurements and analysis

Question 7

economic entity assumption

Answer 7

when considering an identifiable set of activities

Question 8

GC assumption

Answer 8

presumes that entity will continue to operate in foreseeable future

Question 9

periodicity assumption

Answer 9

economic activity can be divided into meaningful time periods

Question 10

replacement cost

Answer 10

• cash/CE that would be paid to acquire/replace an asset currently
• known as acq cost

Question 11

what is an operating procedure for issuing FASB ASU’S?

Answer 11

ASU issued only after a majority vote by members of FASB

Question 12

materiality and relevance are both defined by:

Answer 12

what influences a decision maker

Question 13

when measuring for disposed or to be disposed FA’s, we use:

Answer 13

NRV

Question 14

when do we measure with HC?

Answer 14

For cont. op’s

Question 15

interim FR’ing should be viewed as:

Answer 15

an integral part of an annual period

Question 16

according to FASB conceptual framework, what is an essential characteristic of an asset?

Answer 16

provides future benefits

Question 17

what is the primary objective of FR’ing?

Answer 17

provide info that is useful for economic decision making

Question 18

what is included in a single step IS?

Answer 18

“REGL”

• purch. discounts reduce COGS (reduces Rev in multi-step IS)
• recovery of account WO does not hit the revenue account

Question 19

how do we account for an adjustment of an error?

Answer 19

prior period adjustment reflected in BB RE (NOT IS)

Question 20

how do we report U/I or U+I items on the FS’s?

Answer 20

• Report separately as part of income from cont. op’s

* nature of the item should be disclosed on the face/footnotes (both US+IFRS)