Financial Accounting and Reporting

Topics: Balance sheet, Generally Accepted Accounting Principles, Income statement Pages: 51 (12407 words) Published: November 12, 2013
FINANCIAL ACCOUNTING AND REPORTING
Module 9: Basic Theory and Financial Reporting
Module 10: Inventory
Module 11: Fixed Assets
Module 12: Monetary Current Assets and Current Liabilities
Module 13: Present Value
Module 14: Deferred Taxes
Module 15: Stockholders’ Equity
Module 16: Investments
Module 17: Statement of Cash Flows
Module 18: Business Combinations and Consolidations
Module 19: Derivative Instruments and Hedging Activities
Module 20: Miscellaneous
Module 21: Governmental (State and Local) Accounting
Module 22: Not-for-Profit Accounting
Outlines of Accounting Pronouncements
As indicated previously, this manual consists of 14 modules designed to facilitate your study for the Financial Accounting and Reporting section of the Uniform CPA Examination. The table of contents at the right describes the content of each module.

Module 9: Basic Theory and Financial Reporting
A. Basic Concepts

Key Terms
Multiple-Choice Questions (1-83)
Multiple-Choice Answers
Simulations
Simulation Solutions
B. Error Correction

Multiple-Choice Questions (1-29)
Multiple-Choice Answers
Simulations
Simulation Solutions
C. Accounting Changes

Key Terms
Multiple-Choice Questions (1-29)
Multiple-Choice Answers
Simulations
Simulation Solutions
D. Financial Statements

Key Terms
Multiple-Choice Questions (1-115)
Multiple-Choice Answers
Simulations
Simulation Solutions

Overview
This module covers basic concepts such as the conceptual framework and revenue recognition, error correction such as counterbalancing and classification errors, accounting changes such as changes in principle and changes in estimates, and financial statements such as the income statement and balance sheet.

US GAAP is the basis for financial reporting but it does not constitute a cohesive body of accounting theory. Concept Statements were issued to provide a theoretical framework for accounting standard development and a basis for financial reporting.

As of July 1, 2009, the Accounting Standards Codification (ASC) became the single source for US GAAP. The relevant Accounting Standards Codification topic is indicated in the discussion with a cross-reference to the previous accounting literature (i.e., ARB, APB, SFAS, and SFAC). Appendix A of this text includes an outline of the pre-Codification standards with a cross reference to the appropriate Codification topics to help candidates transition to the FASB’s Accounting Standards Codification. Note these outlines appear in the following sequence: ARB, APB, SFAS, and SFAC. Turn to each outline as directed and study the outline while reviewing the related journal entries, computations, etc.

The AICPA began testing International Financial Reporting Standards (IFRS) on January 1, 2011. Coverage of international standards and outlines of the differences between US GAAP and IFRS are located at the end of each module.

A. Basic Concepts
Basic concepts include theory, income determination, accruals, deferrals, and revenue recognition. 1. Basic Accounting Theory
Effective July 1, 2009, the FASB’s Accounting Standards Codification became the single source of US GAAP for nongovernmental entities.
a. The Accounting Standards Codification (ASC) replaced all previously issued nonSEC accounting literature. The Codification did not change GAAP, but merely restructured the existing accounting standards to provide one cohesive set of accounting standards.

(1) Included in the Codification is all GAAP, as well as relevant literature issued by the

SEC.
(2) The FASB issues Accounting Standards Updates (ASUs) to update the Codification. NOTE: To help the CPA candidate transition to the Accounting Standards Codification, the Codification citation is shown first, and the cross-reference to previous GAAP citations are shown in parentheses.

b. Theory can be defined as a coherent set of hypothetical, conceptual, and pragmatic principles forming a general frame of reference for a field of...
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