1. recognition
2. measurement
3. disclosure

1. simplify structre/accessibility
2. authoritative all in one location
3. decrease time and effort required to research an accounting issue
4. decrease noncompliance w/ GAAP risk
5. facilitate updating of standards
6. assist FASB w/ research

1. objective of financial reporting
2. qualitative characteristics of accounting info
3. accounting assumptions
4. basic accounting principles
5. constraints
6. elements of financial statements

objective of financial reporting

provide info about the entity for current and future creditors and investors

1. relevance
2. faithful representaion (reliance)

• makes a difference to decision makers in their role as capital providers
• has predictive value, confirmative value, or both

1. comparability
2. verifiability
3. timeliness
4. understandability

1. entity
2. going concern
3. unit-of-measure
4. time period

E GUT

1. historical cost
2. revenue recognition
3. matching
4. full disclosure

HR MF

1. materiality
2. cost effectiveness

1. financial position at year end
2. earning for year
3. comprehensive income for the year
4. cash flow during year
5. investments and distributions by/of owners during the year

1. definition
2. measureability
3. relevance
4. reliability (representationally faithful)

1. traditional approach
2. expected cash flow approach

• uses a single, most-likely cash flow in the computation
• uses interest rate to capture all uncertainties and risks inherent in a cash flow measure

• uses expectations about all possible cashflows
• uncertainty as to timing and amount can be incorporated into calculation
• uses risk-free as discount rate

international accounting standards board

• london based organization formed to develope a single set of financial accounting standards worldwide (IFRS)
• no enforcement powers (like FASB)

1. composed of public market authorities 
2. participates in process of appointing trstees and approving them
3. formal link between trustees and public authorities

1. governed by trustees who represnt all global accounting standards-setters
2. 22 trustees in total (who appoint members for 3 boards under them) who serve 3 year terms
3. oversees, reviews, and finances IASB

1. IFRS advisory council
2. IASB
3. IFRS interpretations committee

1. 30 or more members
2. provides strategic advice to IASB

1. makes IFRS known and approves interpretations
2. 14 memebers serve up to 5 years (term is renewable once)

1. report to IASB
2. serves similar role to FASBs EITF except its decisions aren't final
3. 14 member, 3-year/renewable terms

1. item added to agenda
2. discuss issue and prepare discussion paper
3. publish discussion paper w/ consent of simple majority of board
4. prepare exposure draft (9 votes if <16, 10 if 16 or more)
5. issue exposure draft
6. analyze comments
7. debate/issue the final IFRS w/ application guidance and basis for conclusions (9 votes if <16, 10 if 16 or more)

5 steps for developing IFRS Interpretations

1. IFRS interpretations committee initiates agenda items 
2. IFRS interpretations committee drafts interpretation based on available info (4 or less vote against)
3. draft made public and IFRS interpretations committee considers comments
4. final interpretation includes a summary of relevant accounting issues
5. IASB must ratify w/ 9 votes if less then 16 member, 10 votes if 16 or more

1. objective and qualitative characteristics
2. elements of recognition
3. measurement
4. reporting entity
5. presentation and disclosure
6. framework for a GAAP hierarchy
7. applicability to not-for-profit sector
8. remaining issues

1. financial statements prepared w/ accrual basis
2. going concern of entity

1. protects investors
2. maintain fair, orderly, and efficient markets
3. facilitate capital information

• FS now accepted by SEC
• any foreign issuer except goverments or with more than 50% outstanding voting stock directly/indirectly owned by US residents AND either (a)a majority of exec. officers or directors are US citizens or residents, (b) more than 50% of assets are in US, OR (c) business primarily administered in US

1. division of corporate finance
2. division of enforcement
3. division of trading and markets
4. division of investment management

1. financial reporting release
2. staff accounting bulletins
3. accounting and auditing enforcement releases

1. 2 years of balance sheets
2. 3 years of IS
3. 3 years of SOCF
4. 3 years of statements on shareholder's equity

(ALL AUDITED)

• annual filing
• required under Act of 1934 as part of continuing filing

• quarterly filing
• required under Act of 1934 as part of continuing filing

• significant events
• required under Act of 1934 as part of continuing filing

• report by management for right to vote through proxy for SH at meetings
• required under Act of 1934 as part of continuing filing

Large Accelerated Filer: 60 days after year-end

Accelerated filer: 75 days after year-end

Non-accelerated filer: 90 days after year-end

Large Accelerated Filer: 40 days after quarter-end

Accelerated filer: 40 days after quarter-end

Non-accelerated filer: 45 days after quarter-end

1. assets and liabilities are acquired at different time and don't take inflation into account
2. different measurement bases
3. different accounting methods with consolidated entities
4. value of assets is primarily through use which varies from MV and BV

Current Assets

Current Liabilities

Cash +/- short term investments +/- AR

Current Liabilities

1. analyze relevant source documents and records journal entries
2. post from journal to ledger
3. record adjusting entries at end of accounting period
4. prepare trial balances
5. prepare income statement and balance sheet
6. close temporary account balances

1. expected to be realized in one cycle
2. realized within 12 months
3. primary purpose is trade 
4. cash or cash equivalents unless restricted for 12 months

1. prior period adjustments
2. other comprehensive income

4 components of other comprehensive income

1. foreign currency translation adjustments
2. unrealized holding gains and losses on securities available for sale 
3. pensions and other post retirement benefit plan cost adjustments
4. certain deferred derivative gains and losses

• revenues - expenses + gains - losses
• reflects recorded transactions, events, and adjustments
• changes in market value not recognized until substained by a transaction unless it is a security w/ determinable MV

• change in net worth (FMV of net assets) of business enterprise during an accounting period
• net income includes changes in FMV of A/L
• =MV of net assets @ 1/1 + Net income for period + owner investments - dividends and stock purchases

• consists of continuing operations and routinely occuring items
• GAAP is loose on presentation rules

• made up of discontinued operations and extraordinary items which are unusual and infrequent
• GAAP is very specific on measurement and presentation of these items

net sales

-COGS

gross margin

-operating expenses

+Miscellaneous revenues and gains

-miscellaneous expenses and losses

+ or - unusual or infrequent items

income from continuing operations before tax

- income tax expense

income from continuing operations

+/- income from discontinued operations (net of tax)

+/- extraordinary items (net of tax)

NET INCOME

• applied through discontinued operation items, extraordinary items, other comprehensive income items, adjustment for retroactive accounting principe changes, and prior period adjustment
• records prior periods total tax consequence in current tax payable and deferred tax accounts

• involves a presentation of income from continuing operations that includes multiple comparisons of revenues, expenses, gains, and losses
• provides reader with operating margin

1. function
2. nature 

1. separate comprehensive income statement
2. combined income and comprehensive income report
3. statement of shareholder equity

• brings in OCI from prior period and is adjusted by OCI for period
• owners equity account

• required for IFRS but not for GAAP
• needs to list past 2 years of financials as well as current year
• For GAAP, put in supplemental schedule or notes

1. provides information about cash receipts and payments to help investors, creditors, and others assess past, future, and borrowing needs
2. provides information about investing and financing activities which don't involve cash flow

1. short-term (maturity date 3 months or less), highly liquid investments
2. readily convertible to known amount of cash
3. sufficiently close to maturity so that the risk of changes in interest rate is significant

1. operating activities
2. investing activities
3. financing activities
4. effects of foreign currency
5. reconciliation of net cash in/out flows w/ reported change in cash and cash equivalents in BS
6. non-cash investing and financing activities

Operating

Investing

Financing

Foreign Currency

Net Change

Beginning Cash

Ending Cash

• reports cash related to items that enter into determination of net income
• inflows: from customers, dividends from investment, interest
• Outflows: payment to suppliers, employees, interest, income taxes

• reports cash related to investment in and disposal of non-cash assets

• reports cash that relate to how company is financed
• inflows: sale of own stock, proceeds from borrowing
• outflows: repurchase of own stock (treasury), paying back lenders (principal only), payment of dividends

1. reports components of cash flow from operating activities as individual items of gross receipts of cash and gross payments of cash
2. to derive net cash provided by operating activities, each itm on the income statement is adjusted from an accrual basis to cash basis to reflect actual cash used or generated

1. Financial report disclosures under GAAP
2. Noncurrent liability disclosures under GAAP
3. Capital structure disclosures
4. Errors and irregularities
5. Illegal Acts

1. summary of significant accounting policies
2. related party transactions
3. development stage enterprises

1. rights and privileges of outstanding securities
2. # of shares issued
3. liquidation preference for preferred stock
4. other preferred stock disclosures
5. redeemable preferred stock

1. inflation- increase in general prices in a period of time
2. nominal dollars- measurements in price level in effect at a transaction date
3. constant dollars- measurements in general price level as of a specific date

1. statement of compliance with IFRS
2. summary of significant accounting policies
3. supporting info for FS items

(Net income + interest expense + Income tax)

Interest expense

Net Income

annual preferred dividend obligation

(Net) Credit Sales

average (Net) accounts receivable

business days in year

accounts receivable turnover

cogs

average inventory

net income

net sales

(Net Income + interest expense net of tax)

average total assets

return on common shareholder equity

(net income-preferred dividend obligation for period)

average common shareholder equity

net income

average shareholder equity

(net income-preferred dividends)

weighted average # of shares outstanding

market price for a common share

earnings per share

total liabilities

total shareholder equity

shareholders equity

total assets

total liabilities

total assets

1. 3 statements of financial position
2. 2 statements of comprehensive income
3. 2 income statements
4. 2 statements of change in equity
5. reconciliation of US GAAP to IFRS

1. cash basis
2. modified cash basis
3. income tax basis 

1. based solely on cash receipts and cash disbursements
2. may be appropriate for small, very closely held business whose main concern is cash flow
3. income statement should be called "cash receipts and cash disbursements"

1. reorganizing acquisition of property, plant, and equipment
2. reorganizing accounts receivable when revenues are earned and accounts payable when obligations are incurred
3. reorganizing income taxes when they become payable

• results from using federal income tax rules and regulations that the firm uses in filing their tax return for financial statements
• nontaxable receipts and nondeductible payments generally would be recognized in a statement of revenues and expenses

depend on nature:

1. error on prior year return: prior period adjustment
2. non-error, not on balance sheet: current period expense
3. non-error, on balance sheet: prior period adjustment

1. doesn't require statement of cash flows
2. must disclose like GAAP
3. may be audited/reviewed by CPA
4. changing the basis of accounting from OCBOA to GAAP or vice-versa requires prior period restatement of FS

1. OCBOA
2. specified elements
3. compliance
4. special purpose financial presentations
5. financial information presented in prescribed form or schedules

2 Financial statements that are part of personal financial statements and 2 that are not

YES

1. statement of financial position (Balance sheet)
2. statement of change in net worth

   ---

   NO
3. income statement
4. statement of cash flows

1. name
2. statement that assets and liabilities = current values
3. estimate methods
4. description of asset joint ownership
5. significant investment concentration
6. intangible assets
7. future interests
8. methods/assumptions
9. unused operating losses
10. receivable and debt info
11. committment descriptions if non-cancelable

When are future interests and rights recognized in personal financial statements?

only when they are

1. fixed or determineable in amount
2. not contingent upon specific event
3. don't require future performance

lower of

1. amount at which liability could be settled currently, or
2. PV of cash to be paid in future settlement

1. required to file FS w/ a securities commission or other regulatory body
2. hold assets in a fiduciary capacity for a broad group of outsiders
3. not-for-profit organizations