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1.1 Financial accounting standard (US GAAP (Security and Exchange…

- - - - Accounting Principle Board Opinions
        (APBO)
      - APB Interpretation
  - - - In 2009 , FASB issues
        
        Statements of Financial Accounting Standards (SFAS)
        
        FASB Interpretations (FIN)
        
        FASB Technical Bulletins (FTB)
        
        Emerging issues Task Force Statement (EIFT)
        
        FASB Staff Positions
        
        FASB Implementation Guides
        
        Statements of Financial Accounting Concepts (SFAC)
      - The FASB has seven full-time members who serve for five year terms and maybe re-appointed to one additional five-year term. The Board members must sever connection with firms or institutions before joining the board.
- - - - Accounting Standards Updates are not authoritative literature, but instead provide background information update the codification and describe the basis for conclusions on changes in the codification. All new GAAP and SEC amendments are fully integrated into the existing striation of the codification.
- - - - Primary Users: Existing and potential investors, lenders and other creditors.
  - - - Fundamental Qualitative Characteristics.
        
        Relevance
        
        Financial information is relevant if it is capable of making a difference in the decisions made by users.
        
        Predictive Value
        
        if it can bemused by users to predict future outcomes
        
        Confirmatory Value
        
        if it provides feedback about evaluations previously made by users.
        
        Materiality
        
        if an omission or misstatement of the information could affect the decision made by users based on financial information.
        
        Faithful Representation
        
        To be useful, financial information must faithfully represent the reported economic phenomena.
        Although perfect faithful representation is generally not achievable, these cha
        
        Complete
        
        include all information necessary for the user to understand the reported economic event, including description and explanations.
        
        Free From Error
        
        there are no errors in the selection or application of the process used to produce reported financial information and that there are no errors or omissions in the descriptions of economic events.
        
        Neutral
        
        free from bias in selection or presentation
      - Steps to Apply the Fundamental Qualitative Characteristics.
        
        Identify the economic event or transaction that has the potential to be useful for the users of a reporting entity's financial information.
        
        Identify the type of information about the event or transaction that would be most relevant.
        
        Determine whether the information is available and can be faithfully represented.
      - Enhancing Qualitative Characteristics
        
        Comparability
        
        information is more useful if it can be compared with similar information about other entities or from other time periods.
        
        Comparability enables users to identify similarities and differences among items.
        
        Consistency which is the use of the same methods for the same items either from period to period within an entity or in a single period across entities, help to achieve comparability.
        
        Verifiability
        
        mean that different knowledgable and independent observers can reach consensus that a particular depiction is faithful represented.
        
        Timeliness
        
        means that information is available to users in time to be capable of influencing their decision.
        
        Understandability
        
        information is understandable if it is classified, characterized, and presented clearly and concisely.
- - - - Their operating purposes are other than to provide goods or services for profit.
        
        They lack ownership interests that can be sold, transferred, or redeemed, or that allow a claim on resources upon liquidation.
  - - - Constituents: who use and benefit from the services provided by nonbusiness organization.
        
        Governing and oversight bodies:that are responsible for setting policies and for overseeing and evaluating the managers of nonbusiness organization.
        
        Managers: who are responsible for carrying out the policy mandates of the governing bodies and managing the day-to-day operations of the nonbusiness organization.
  - - - Information useful in assessing services and the ability to provide services.
        
        Information useful in assessing management stewardship and performance.
        
        Information about economic resources, obligations, and net resources, organization performance, the nature of and relationship between inflow and outflows, service effort and accomplishments and liquidity.
- - - - Definition: the item meets the definition of an element of financial statement.
        
        Measurability : the item has relevant attribute measurable
        
        Relevance: the information about it is capable of making a difference to a financial statement user.
        
        Reliability: the information is representationally faithful, verifiable and neutral
  - - - PP& E: Historical Value
        
        Inventory: Current Cost
        
        Account Receivable: Net Realizable Value
        
        Market Security/TS/AFS : Current Market Value
        
        Bonds, Notes:Present value of future cash flow
  - - - Going Concern Assumption: For financial accounting, it is presumed that the entity will continue to operate in the foreseeable future.
        
        Monetary Unit Assumption: it is assumed that money is an appropriate basis by which to measure economic activity.
        
        Periodic Assumption: economic can be divided into meaningful time period: quarter/year
        
        Measurement Principle: Financial statements use a mixed attribute system that allows assets and liabilities to be measured at various bases.
        
        Accrual accounting: revenue are recognized when the performance obligation is satisfied and expenses are recognized in the same period as the related revenue, not necessarily in the period in which the cash is received or expensed by the company.