Question: How many members serve on the GASB?

> The SEC released for public comment a proposed road map for adoption of IFRS by public companies in the United States. What were the serious concerns?

> Briefly describe the PCAOB.

> Comment on the materiality implications of the Sarbanes-Oxley Act.

> Describe the book Accounting Trends & Techniques.

> If its accounting period ends December 31, would a company be using a natural business year or a fiscal year?

> Comment on the responsibility of private companies under the Sarbanes-Oxley Act.

> Comment on perceived benefits from Section 404 of the Sarbanes-Oxley Act.

> Under the Sarbanes-Oxley Act, what must the financial statement auditor do in relation to the company’s internal control?

> Comment on what Section 404 of the Sarbanes Oxley Act requires of companies.

> China Unicom (Hong Kong) Limited provides a full range of telecommunications services, including mobile and fixed line service, in China. They are listed on the New York Stock Exchange and filed a Form 20-F with the SEC for the period ended December 31,

> It is not important to know when cash is received and when payment is made. Comment.

> The cash basis does not reasonably indicate when the revenue was earned and when the cost should be recognized. Comment.

> Briefly explain the difference between an accrual basis income statement and a cash basis income statement.

> There are five different measurement attributes currently used in practice. List these measurement attributes.

> SFAC No. 5 indicates that, to be recognized, an item should meet four criteria, subject to the cost-benefit constraint and materiality threshold. List these criteria.

> According to SFAC No. 2, relevance and reliability are the two primary qualities that make accounting information useful for decision making. Comment on what is meant by relevance and reliability.

> Financial accounting is designed to measure directly the value of a business enterprise. Comment.

> The objectives of general-purpose external financial reporting are primarily to serve the needs of management. Comment.

> Briefly describe the following: a. Committee on Accounting Procedures b. Committee on Accounting Terminology c. Accounting Principles Board d. Financial Accounting Standards Board

> What is the FASB Conceptual Framework for Accounting and Reporting intended to provide?

> For those assets deemed to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. The Company’s determination of fair value is primarily ba

> Briefly describe the operating procedure for Statements of Financial Accounting Standards.

> Briefly explain the term generally accepted accounting principles.

> Explain the matching principle. How is the matching principle related to the realization concept?

> What is the basic problem with the monetary assumption when there has been significant inflation?

> Which U.S. government body has the legal power to determine generally accepted accounting principles?

> Dexter Company charges to expense all equipment that costs $25 or less. What concept supports this policy?

> Elliott Company constructed a building at a cost of $50,000. A local contractor had submitted a bid to construct it for $60,000 a. At what amount should the building be recorded? b. Should revenue be recorded for the savings between the cost of $50,000

> At which point is revenue from sales on account (credit sales) commonly recognized?

> Would an accountant record the personal assets and liabilities of the owners in the accounts of the business? Explain.

> Why did the FASB commence the Accounting Standards Codification™ project?

> Boston Celtics Limited Partnership II and Subsidiaries presented the following consolidated statements of income for 1998, 1997, and 1996. Required a. Comment on Amortization of NBA Franchise and Other Intangible Assets. b. Would the discontinued opera

> An entity may choose between the use of the accrual basis of accounting and the cash basis. Comment.

> Some industry practices lead to accounting reports that do not conform to the general theory that underlies accounting. Comment.

> Many important events that influence the prospects for the entity are not recorded in the financial records. Comment and give an example.

> Is the presentation of a personal income statement appropriate?

> The same generally accepted accounting principles apply to all companies. Comment.

> What personal financial statement should be prepared when an explanation of changes in net worth is desired?

> In a personal statement of financial condition, what is the equity section called?

> When preparing a personal statement of financial condition, should assets and liabilities be presented on the basis of historical cost or estimated current value?

> Are comparative financial statements required when presenting personal financial statements?

> Is a statement of changes in net worth required when presenting personal financial statements?

> What is the basic personal financial statement?

> May personal financial statements be prepared only for an individual? Comment.

> Why are the financial data of a component unit included with the government entities reporting entity?

> For the government-wide statements, governmental activities are to be presented separately from the financial statements of business-type activities. Give one example of a governmental activity and one example of a business-type activity.

> Under GASB, which statement has been the most substantial pronouncement?

> It is proper to handle immaterial items in the most economical, expedient manner possible. In other words, generally accepted accounting principles do not apply. Comment, including a concept that justifies your answer

> What is the purpose of the book, Codification of Governmental Accounting and Financial Reporting Standards?

> Could a profit-oriented enterprise use fund accounting practices? Comment Answer: No. The accounting for a profit enterprise is centered on the entity concept and the efficiency of the entity. Fund accounting is centered on a self-balancing set of acc

> The accounting for not-for-profit institutions does not typically include the concept of efficiency. Indicate how the concept of efficiency can be incorporated in the financial reporting of a not-for-profit institution.

> The rating on an industrial revenue bond is representative of the probability of default of bonds issued with the full faith and credit of a governmental unit. Comment.

> Which organization provides a service whereby it issues a certificate of conformance to governmental units with financial reports that meet its standards?

> The budget for a state or local government is not as binding as a budget for a commercial business. Comment.

> How many funds will be used by a state or local Government?

> The accounting for governments is centered on the entity concept and the efficiency of the entity. Comment.

> Do not-for-profit organizations, other than governments, use fund accounting? Comment.

> No estimate or subjectivity is allowed in the preparation of financial statements. Discuss.

> List some objectives that could be incorporated into the financial reporting of a professional accounting organization.

> If quoted market prices are not available, a personal financial statement cannot be prepared. Comment.

> Give examples of disclosure in notes with personal financial statements.

> List some sources of information that may be available when preparing personal financial statements.

> Is the concept of working capital used with personal financial statements? Comment.

> GAAP as they apply to personal financial statements use the cash basis. Comment.

> For governmental accounting, define the following types of funds: 1. General fund 2. Proprietary fund 3. Fiduciary fund

> Why must the user be cautious in analyzing bank holding companies?

> To what agencies and other users of financial statements must banks report?

> Why are banks concerned with their loans/deposits ratios?

> Discuss why the concept of full disclosure is difficult to apply.

> Why are savings accounts liabilities for banks?

> Why are loans, which are usually liabilities, treated as assets for banks?

> What are the main sources of revenue for banks?

> Insurance companies tend to have a stock market price at a discount to the average market price (price/ earnings ratio). Indicate some perceived reasons for this relatively low price/earnings ratio.

> Insurance industry-specific financial ratios are usually prepared from financial statements prepared under what standards?

> Briefly describe the unique aspects of revenue recognition for an insurance company.

> Briefly describe the difference between accounting for intangibles for an insurance company under GAAP and under SAP?

> For an insurance company, describe the difference between GAAP reporting and SAP reporting of deferred policy acquisition costs?

> Why could an insurance company with substantial investments in real estate represent a risk?

> Annual reports that insurance companies issue to the public are in accordance with what accounting standards?

> The consistency concept requires the entity to give the same treatment to comparable transactions from period to period. Under what circumstances can an entity change its accounting methods, provided it makes full disclosure?

> Are annual reports filed with state insurance departments in accordance with U.S. GAAP?

> Explain how the publication Financial Analysis of the Motor Carrier Industry could be used to determine the percentage of total revenue a firm has in relation to similar trucking firms?

> How is the passenger load factor of a bus company related to profitability?

> If a transportation firm shows a rise in revenue per passenger mile, what does this increase imply?

> In a transportation firm, what types of things will change operating revenues? Operating expenses?

> Briefly describe the revenue section of the income statement for a transportation firm?

> What is the most important category of assets for transportation firms?

> What type of ratio is operating revenue to operating property? Will it exceed 1:1 for a utility?

> Is it more desirable to have the operating ratios increasing or decreasing for utilities and transportation companies?

> Oil and gas companies must disclose quantity estimates for proved oil and gas reserves and the major factors causing changes in these resource estimates. Briefly indicate why this disclosure can be significant.

> The matching concept involves the determination of when to recognize the costs associated with the revenue that is being recognized. For some costs, such as administrative costs, the matching concept is difficult to apply. Comment on when it is difficult

> Some industries described in this chapter are controlled by federal regulatory agencies. How does this affect their accounting systems?

> Differentiate between successful-efforts and full costing accounting as applied to the oil and gas industry.

> For regulated utilities, describe the income statement accounts, allowance for equity funds used during construction, and allowance for borrowed funds used during construction?

> For regulated utilities, are current liabilities usually presented first in utility reporting? Comment.

> Is times interest earned meaningful for utilities? Why or why not?

> What does the funded debt to operating property ratio measure for a utility?

> Are inventory ratios meaningful for utilities? Why?

> For regulated utilities, why are plant and equipment usually listed first for utilities?

> How does demand for utilities differ from demand for other products or services?