FASB
The FASB states the intent of the _______________ is to establish objectives and fundamental concepts that are the basis for development of financial accounting and reporting guidance.
Conceptual Framework
GAAP consists of the full set of formal statements, known as _____, that establish the authoritative guidance on how companies should account for and report specific transactions, events, and arrangements in their financial statements.
accounting standards
_____ should provide useful information about the reporting entity for existing and potential investors, lenders, and other creditors in making decisions about providing resources to the entity
Financial reporting
_____ provides a measure of overall company performance for equity shareholders.
Return on investment
_____ is the ultimate objective of accounting information.
Decision usefulness
To establish the Conceptual Framework, the FASB has issued a number of _____.
Statements of Financial Accounting Concepts (Concepts Statements)
The FASB establishes new GAAP through _____ to the Codification.
Accounting Standards Updates
Suppliers of financial capital are primarily interested in the amounts, timing, and uncertainty of the prospective _____ they will receive.
cash flows
_____ is the uncertainty or unpredictability of the future profitability of a company.
Risk
Accounting information has _____ if it is capable of making a difference in decisions made by financial statement users.
relevance
In the broadest sense, _____ are fundamental theories, truths, and propositions that serve as the practical foundation for financial accounting and financial reporting. The most fundamental statements of these principles come from the FASB’s Concepts Statements.
accounting principles
_____ represent specific implementation guidelines through which financial statement preparers apply accounting standards to measure and report a company’s financial statements.
Rules
_____ should provide information to help external investors, lenders, and other creditors in assessing the amounts, timing, and uncertainty of the prospective net cash inflows to the company.
Financial reporting
_____ is the ability of a company to use its financial resources to adapt to change and to take advantage of opportunities when they arise.
Financial flexibility
To have _____, accounting information should help users form expectations about the future.
predictive value
The Concepts Statements and fundamental principles form the basis and the objectives of _____, which are the specific methods and practices that U.S. companies are required to use in preparing and reporting specific items of accounting information in financial statements for use by external stakeholders and decision makers.
generally accepted accounting principles (GAAP)
Rules differ from _____ in that rules set forth specific methods and guidance for applying accounting _____.
standards
A specific objective of financial reporting is to provide information about a company’s _____ resources and the claims on the company.
economic
_____ of a company refers to how quickly a company can convert its assets into cash to meet short-term obligations and cover operating costs.
Liquidity
Financial information has _____ if it provides feedback to confirm or correct prior predictions and expectations.
confirmatory value
In the United States, GAAP is established by the FASB and is organized in the _____.
Accounting Standards Codification
Recent debate in the accounting profession has been devoted to whether accounting standards should be principles-based or _____-based. Both U.S. GAAP and IFRS are based on concepts, principles, and rules.
rules
Another specific objective of financial reporting is to provide information about the , as well as other transactions and events, which cause the company’s resources and the claims on the company to change during the period.
financial performance
_____ refers to the ability of a company to efficiently produce goods and services for customers.
Operating capability
_____ refers to the nature and magnitude of an omission or misstatement of accounting information that would influence the judgment of a reasonable person relying on that information.
Materiality