* 1. GAAP is the term used to indicate the whole body of FASB authoritative literature. TRUE * * 2. Any company claiming compliance with GAAP must comply with most standards and interpretations but does not have to follow the disclosure requirements. False, when a company is compliant with GAAP they must follow all aspects of the GAAP. * * 3. The primary governmental body that has influence over the FASB is the SEC. TRUE * 4. The FASB has a government mandate and therefore does not have to follow due process in issuing a standard. FALSE, the FASB has a board and allows one to make their views known.
CA1-3 1. D 2. D 3. C 4. A 5. A 6. A 7. C 8. A
E2-5 1. Liabilities 2. Expenses 3. Equity 4. Distributions to Owners 5. Expenses 6. Assets 7. Revenues 8. Comprehensive Income 9. Losses 10. Gains 11. Investments by Owners 12. Revenues
E2-7 * (a) Fair value changes are not recognized in the accounting records. Fair value principle * * (b) Financial information is presented so that investors will not be misled. Full disclosure principle * (c) Intangible assets are capitalized and amortized over periods benefited. * (d) Repair tools are expensed when purchased. Expense recognition principle * (e) Agricultural companies use fair value for purposes of valuing crops. Going concern assumption * (f) Each enterprise is kept as a unit distinct from its owner or owners. Economic entity assumption * (g) All significant postbalance sheet events are reported. Full disclosure principle * (h) Revenue is recorded at point of sale. Revenue Recognition Principle * (i) All important aspects of bond indentures are presented in
