Financial Accounting and Reporting Every response are completely accurate, ensuring a perfect score.
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Course
FAC1601 Financial Accounting & Reporting
Institution
FAC1601 Financial Accounting & Reporting
International Accounting Standards Board (IASB) - Answer On a global level, they determine the
general accounting standards and is made up of board members from nine countries
International Financial Reporting Standards (IFRS) - Answer IASB's mission is to develop a single
set of global accounti...
formed in 1973 that decides on GAAP and publishes in the form of Accounting Standards Certification
(ASC) Topics
SEC - Answer Authority for enforcing US accounting principles, which relies on FASB to develop
the accounting standards
SEC Regulation S-X - Answer Outlines accounting reporting requirements, which are published
within the SEC's Financial Reporting Release (FRR)
4 Basic Principles Underlying GAAP - Answer Historical-Cost Principle: most assets and liabilities
reported at historical cost;
Full-Disclosure Principle: Info that may influence judgment and decision of user of financial info should
be disclosed;
Revenue Recognition Principle: revenue reported when (1) cash or a claim for cash is received in
exchanged for goods/services and (2) the earnings process is substantially complete;
Matching Principle: Expenses must be reported when revenues with which they are associated are
recognized
Differences between GAAP and IFRS - Answer IFRS does not permit last-in, first-out (LIFO)
accounting;
IFRS uses single-step method for impairment write-downs while GAAP uses 2-step;
IFRS requires capitalization of development costs once certain qualifying criteria are met while GAAP
requires development to be expensed as incurred
Sarbanes-Oxley Act (SOX) - Answer Act passed by US Congress with purposes of restoring
confidence in published financial statements by establishing set of controls over audit procedures and
disclosure requirements; this was a result of accounting manipulations that led to downfall of several
public companies
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