ch01 international accounting

Chapter1-1Chapter1-2CHAPTER1FINANCIALACCOUNTINGANDACCOUNTINGSTANDARDSIntermediateAccounting13thEditionKieso,Weygandt,andWarfieldChapter1-3LO1Identifythemajorfinancialstatementsandothermeansoffinancialreporting..FinancialStatementsandFinancialReportingEssentialcharacteristicsofaccountingare:(1)theidentification,measurement,andcommunicationoffinancialinformationabout(2)economicentitiesto(3)interestedparties.Chapter1-4FinancialInformationAccounting?IdentifiesandMeasuresandCommunicatesBalanceSheetIncomeStatementStatementofCashFlowsStatementofOwners’orStockholders’EquityNoteDisclosuresPresident’sletterProspectuses,SECReportingNewsreleasesForecastsEnvironmentalReportsEtc.GAAPNotGAAPFinancialStatementsAdditionalInformationEconomicEntityLO1Identifythemajorfinancialstatementsandothermeansoffinancialreporting..FinancialStatementsandFinancialReportingChapter1-5AccountingandCapitalAllocationResourcesarelimited.Efficientuseofresourcesoftendetermineswhetherabusinessthrives.FinancialReportingInformationtohelpuserswithcapitalallocationdecisions.UsersInvestors,creditors,andotherusersCapitalAllocationTheprocessofdetermininghowandatwhatcostmoneyisallocatedamongcompetinginterests.LO2Explainhowaccountingassistsintheefficientuseofscareresources.Illustration1-1CapitalAllocationProcessChapter1-6ChallengesFacingFinancialAccountingNonfinancialMeasurementsForward-lookingInformationSoftAssetsTimelinessLO3Describesomeofthechallengesfacingaccounting.Chapter1-7Financialreportingshouldprovideinformationthat:(a)isusefultopresentandpotentialinvestorsandcreditorsandotherusersinmakingrationalinvestment,credit,andsimilardecisions.(b)helpspresentandpotentialinvestorsandcreditorsandotherusersinassessingtheamounts,timing,anduncertaintyofprospectivecashreceipts.(c)clearlyportraystheeconomicresourcesofanenterprise,theclaimstothoseresources,andtheeffectsoftransactions,events,andcircumstancesthatchangeitsresourcesandclaimstothoseresources.ObjectivesofFinancialAccountingLO4Listtheobjectivesoffinancialreporting.Chapter1-8NeedtoDevelopStandardsVarioususersneedfinancialinformationTheaccountingprofessionhasattemptedtodevelopasetofstandardsthataregenerallyacceptedanduniversallypracticed.FinancialStatementsBalanceSheetIncomeStatementStatementofStockholders’EquityStatementofCashFlowsNoteDisclosureGenerallyAcceptedAccountingPrinciples(GAAP)LO5Explaintheneedforaccountingstandards.Chapter1-9PartiesInvolvedinStandardSettingThreeorganizations:SecuritiesandExchangeCommission(SEC)AmericanInstituteofCertifiedPublicAccountants(AICPA)FinancialAccountingStandardsBoard(FASB)LO6Identifythemajorpolicy-settingbodiesandtheirroleinthestandard-settingprocess.Chapter1-10SecuritiesActof1933SecuritiesExchangeActof1934SecuritiesandExchangeCommissionEstablishedbyfederalgovernmentAccountingandreportingforpubliccompaniesEncouragedprivatestandard-settingbodySECrequirespubliccompaniestoadheretoGAAPSECOversightEnforcementAuthorityLO6Identifythemajorpolicy-settingbodiesandtheirroleinthestandard-settingprocess.Chapter1-11AmericanInstituteofCPAsNationalprofessionalorganizationEstablishedthefollowing:LO6CommitteeonAccountingProceduresAccountingPrinciplesBoard1939to1959Issued51AccountingResearchBulletins(ARBs)Problem-by-problemapproachfailed1959to1973Issued31AccountingPrincipleBoardOpinions(APBOs)WheatCommitteerecommendationsadoptedin1973’srecommendationsresultedinthecreationofatheFinancialAccountingStandardsBoardin1973.FinancialAccountingFoundationSelectsmembersoftheFASBFundstheiractivitiesExercisesgeneraloversight.FinancialAccountingStandardsBoardFinancialAccountingStandardsAdvisoryCouncilMissiontoestablishandimprovestandardsoffinancialaccountingandreporting.Consultonmajorpolicyissues.LO6Identifythemajorpolicy-settingbodiesandtheirroleinthestandard-settingprocess.Chapter1-13Missionsistoestablishandimprovestandardsoffinancialaccountingandreporting.DifferencesbetweenFASBandAPBinclude:FinancialAccountingStandardsBoardSmallerMembershipFull-time,RemuneratedMembershipGreaterAutonomyIncreasedIndependenceBroaderRepresentation:(1)Responsivetoentireeconomiccommunity(2)OperateinfullviewofthepublicDueProcessStep1=TopicplacedonagendaStep2=ResearchconductedandDiscussionMemorandumissued.Step3=PublichearingStep4=Boardevaluatesresearch,publicresponseandissuesExposureDraftStep5=BoardevaluatesresponsesandissuesfinalStatementofFinancialAccountingStandardLO6Identifythemajorpolicy-settingbodiesandtheirroleinthestandard-settingprocess.Chapter1-15IssuedbytheFASB:TypesofPronouncementsStandards,Interpretations,andStaffPositions.FinancialAccountingConceptsEmergingIssuesTaskForceStatementsLO6Identifythemajorpolicy-settingbodiesandtheirroleinthestandard-settingprocess.Chapter1-16TheAICPAestablishedtheAccountingStandardsExecutiveCommittee(AcSEC):AuditandAccountingGuidesStatementsofPosition(SOP