MGAC01H3 Chapter Notes - Chapter 2: Revenue Recognition, Financial Statement, Income Statement

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18 Oct 2011

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1: control, revenue recognition and realization, matching. 5: monetary unity, going concern, historical cost. There is no requirement to have unrestricted, total control or power over the entity. In addition, as long as the reporting entity has the ability to control the other entity, it need not exercise that control: the reporting entity should have access to the benefits from the entity. Revenue recognition and realization risks and rewards have passed or the earnings process is substantially complete revenue has generally been recognized when the following 3 conditions are met: The first level deals with the objective of financial reporting. The second level includes the qualitative characteristics of useful information and elements of financial statements. The third level includes foundational principles and conventions: understand the objective of financial reporting. The objective of financial reporting is to provide information that is useful to individuals making investment and credit decisions.

Related Questions

Complete the following as per the FASBâs Conceptual Frameworkfor Financial Reporting.

I. a) Write out the objective of financial reporting.

b) List the fundamental qualities. (Note: 2 with 3 within eachof those 2)

c) List the enhancing qualities.

d) List the elements of the financial statements.

e) List the recognition, measurement, and disclosureconcepts.

II. Write out the description of each of the fundamentalqualities. (1 â 3 sentences for each)

III. Write out the description of each of the enhancingqualities. (1 â 3 sentences for each)

IV. Write out the definition of each of the elements of thefinancial statements.

V. Write out the description of each of the recognition,measurement, and disclosure concepts. (1 â 3 sentences foreach)

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Research Caseâ

Federal Financial Reporting Objectives. Statement of FinancialAccounting Concepts 1, âObjectives of Federal Financial Reportingâat (http://www.fasab.gov/pdffiles/handbook_sffac_1.pdf) identifiesaccountability and decision usefulness as the fundamental values offederal governmental financial accounting and reporting. Thestatement identifies four groups of users to whom the governmentowes accountability and the possible needs of each user group.

Required

Briefly describe the user groups, their needs for information,and how these tie into the four objectives of federal financialreporting identified in the statement.

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Karen Sepan, a recent graduate of the local state university, ispresently employed by a large manufacturing company. She has beenasked by Jose Martinez, controller, to prepare the company'sresponse to a current Preliminary Views published by the FinancialAccounting Standards Board (FASB). Sepan knows that the FASB has aconceptual framework, and she believes that these conceptstatements could be used to support the company's response to thePreliminary Views. She has prepared a rough draft of the responseciting the objective of financial reporting.
Instructions
(a) Identify the objective of financial reporting.
(b) Describe the level of sophistication expected of the users offinancial information by the objective of financial reporting.

MGAC01H3 Chapter Notes - Chapter 2: Revenue Recognition, Financial Statement, Income Statement

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