Contemporary Issues in Accounting

ACCOUNTING

ContemporaryIssues in Accounting

The Five HousePuzzle

The first step in solving this puzzle is to create an excel sheetthat will enable me to visually represent the puzzle. Within theexcel sheet, I will develop individual puzzle pieces determined bythe positional constraints derived from the associational clues. Thisis exemplified below:

Based on the above pattern, the table below indicates the correctplacement of each item.

House

1

2

3

4

5

Country

American

Russian

Englishman

Spaniard

Japanese

Color

Yellow

Blue

Red

White

Green

Sport

Football

Table tennis

Hockey

Basketball

Baseball

Drink

Water

Tea

Milk

Orange Juice

Coffee

Pet

Fox

Horse

Hamsters

Dog

Monkey

Therefore, the correct answer to the puzzle is that the Americandrinks water and the Japanese keeps a monkey as a pet.

FASB ExposureDrafts

Within the U.S. two bodies maintain the responsibility of issuingaccounting standards: the International Accounting Standards Board(IASB) and the Financial Accounting Standards Board (FASB). Thelatter is the primary source of Generally Accepted AccountingPrinciples (GAAP). The Securities and Exchange Commission (SEC) hasdesignated FASB to issue Statements of Financial AccountingStandards [CITATION ENe10 p 28 l 1033 ]. When developingnew accounting standards, FASB publishes exposure drafts which arepreliminary versions of the proposed standards released for publiccommentary and feedback. This is an important process as accountingstandards often have far-reaching effects. The following listhighlights three of the most recent FASB Exposure Drafts.

  • Improvements to Accounting for Hedging Activities [CITATION Fin161 l 1033 ] – this proposal mainly affects entities which apply hedge accounting in agreement with GAAP. The suggested proposals will make alterations in both the measurement and designation guidance for qualifying hedging relationships as well as hedge results presentation. The impact of this is that the financial reporting for hedging relationships and the risk management activities of an entity will be better aligned.

  • Conceptual Framework for Financial Reporting [CITATION Fin16 l 1033 ] –FASB has issued conceptual frameworks that govern financial reporting since 1978. It thereafter issued six more by the year 2000. FASB and IASB commenced a joint conceptual framework project in 2004, which led to the development of Conceptual Framework 8 – Chapter 1 and Chapter 3. The latter chapter covered issues relating to qualitative traits of useful financial information while the first chapter covered issues relating to the objective of general purpose financial reporting. This exposure draft, if approved, will comprise the seventh chapter in Conceptual Framework, and it places focus on concepts for measurement and presentation.

  • Clarifying when a not-for-profit entity that is a general partner should consolidate a for-profit limited partnership or similar entity [CITATION Fin162 l 1033 ] – the main entities impacted by this proposed standard are Not-for-Profits (NFPs) that are general partners of a for-profit limited partnership of any other similar entity, which may include limited liability companies which have functionally equivalent governing provisions to limited partnerships.

SEC ProposedRules

The Securities and Exchange Commission (SEC) is a federal governmentagency legally mandated to develop and enforce accounting practicesfor companies whose securities are offered for sale to the generalpublic [CITATION ENe10 p 28 l 1033 ]. Similar to the exposure draftprocess employed by FASB, the SEC submits proposed rules for publiccommentary and feedback. The following list highlights the two mostrecent SEC proposed rules.

  • Exhibit Hyperlinks and HTML Format[CITATION Sec16 l 1033 ] – This rule mainly targets registrants filing registration statements and current and periodic reports which are subject to the exhibit requirements stipulated in Item 601 of Regulation S-K. The proposed rule suggests that such registrants should include a hyperlink to each of the exhibits listed in the exhibit index of each filing. For this to be possible, the proposed rules also add that all such filings by the earlier mentioned registrants should be submitted in HyperText Markup Language (HTML) format. The development of this proposed amendment is in accordance with SECs efforts to increase the efficacy of the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system which it implemented in 1984. The purpose of this system was to automate the dissemination, processing, and receipt of documents which are filed under federal securities law.

  • Disclosure Update and Simplification [CITATION Sec161 l 1033 ] – The purpose of this proposed rule is to make amendments to particular disclosure requirements which may have become superseded, outdated, overlapping, duplicative, or redundant, with respect to other SEC disclosure requirements, International Financial Reporting Standards (IFRS), GAAP, or changes within the information environment. Furthermore, the SEC through this proposed amendment hopes to invite comments that will help them decide whether certain disclosure requirements will be forwarded to FASB for possible inclusion in GAAP, or will be retained, modified, or eliminated. The overall aim of the proposed amendments is to promote information disclosure to investors, while simplifying compliance efforts, without making major alterations to the total mix of information investors are supplied with.

SentenceRewriting

  1. The employee reported the fraud.

  2. I enjoyed the book because the author described the seven fraud investigation techniques so well.

AssetClassification

Assets can be defined as resources which an entity or company owns,and anticipates to receive future benefit from. There are fiveprimary asset categories: current assets intangible assetsproperty, plant, and equipment long-term investments and, otherassets. Current assets are those which can be converted into cashwithin one year or one operating cycle of the asset, whichever islonger [CITATION Cur07 p 296 l 1033 ]. An asset`s operating cyclerefers to the time between when raw materials are purchased and whensales of products made from these raw materials occur. Financialstatements typically comprise five main items under the currentassets section:

  • Cash and cash equivalents – This refers either to actual currency that can be utilized or short-term investments that will mature in less than three month. Examples of cash equivalents include three-month money market instruments, time deposits, or BSP treasury bills. Cash can be in the form of cash on hand, which refers to actual currency or items such as manager’s or cashier’s checks, bank drafts, traveler’s checks, and money orders. Cash may also refer to cash in the bank or cash funds such as dividend funds, payroll funds, or petty cash funds.

  • Receivables – this is anything owed to the entity by a customer or other person for money, services, or goods offered. Examples include interest receivable, notes receivable, and accounts receivable.

  • Inventories – comprises completed products, raw materials, or work-in-progress products

  • Short-term investments – while some short-term investments may be categorized as cash equivalents due to their swift maturity, short-term investments typically comprise: available-for-sale, trading, and, held to maturity investments

  • Prepaid expenses – this is an advance payment for expenses or services to be utilized in the future, for example, prepaid insurance and rent deposit.

The following chart distinguishes between the different types ofassets.

References

Curley, M. T., &amp Walker, J. A. (2007). Barron`s Stockbroker Examination (Third ed.). Hauppauge, New York: Barron`s Educational Series.

Financial Accounting Standards Board. (2016a, August 11). Concepts Statement 8 – Conceptual Framework for Financial Reporting. Retrieved from FASB.org: http://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176168366904&ampacceptedDisclaimer=true

Financial Accounting Standards Board. (2016b, September 8). Derivatives and Hedging (Topic 815). Retrieved from FASB.org: http://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176168427518&ampacceptedDisclaimer=true

Financial Accounting Standards Board. (2016c, August 3). Not-for-Profit Entities – Consolidation (Subtopic 958-810). Retrieved from FASB.org: http://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176168349510&ampacceptedDisclaimer=true

Needles, B. E., &amp Powers, M. (2010). Financial Accounting. Mason, Ohio: Cengage Learning.

Securities and Exchange Commission. (2016a, July 13). Disclosure Update and Simplification. Retrieved from SEC.gov: https://www.sec.gov/rules/proposed/2016/33-10110.pdf

Securities and Exchange Commission. (2016b, August 31). Exhibit Hyperlinks an HTML Format. Retrieved from SEC.gov: https://www.sec.gov/rules/proposed/2016/33-10201.pd

Contemporary Issues in Accounting

ACCOUNTING

ContemporaryIssues in Accounting

The Five HousePuzzle

The first step in solving this puzzle is to create an excel sheetthat will enable me to visually represent the puzzle. Within theexcel sheet, I will develop individual puzzle pieces determined bythe positional constraints derived from the associational clues. Thisis exemplified below:

Based on the above pattern, the table below indicates the correctplacement of each item.

House

1

2

3

4

5

Country

American

Russian

Englishman

Spaniard

Japanese

Color

Yellow

Blue

Red

White

Green

Sport

Football

Table tennis

Hockey

Basketball

Baseball

Drink

Water

Tea

Milk

Orange Juice

Coffee

Pet

Fox

Horse

Hamsters

Dog

Monkey

Therefore, the correct answer to the puzzle is that the Americandrinks water and the Japanese keeps a monkey as a pet.

FASB ExposureDrafts

Within the U.S. two bodies maintain the responsibility of issuingaccounting standards: the International Accounting Standards Board(IASB) and the Financial Accounting Standards Board (FASB). Thelatter is the primary source of Generally Accepted AccountingPrinciples (GAAP). The Securities and Exchange Commission (SEC) hasdesignated FASB to issue Statements of Financial AccountingStandards [CITATION ENe10 p 28 l 1033 ]. When developingnew accounting standards, FASB publishes exposure drafts which arepreliminary versions of the proposed standards released for publiccommentary and feedback. This is an important process as accountingstandards often have far-reaching effects. The following listhighlights three of the most recent FASB Exposure Drafts.

  • Improvements to Accounting for Hedging Activities [CITATION Fin161 l 1033 ] – this proposal mainly affects entities which apply hedge accounting in agreement with GAAP. The suggested proposals will make alterations in both the measurement and designation guidance for qualifying hedging relationships as well as hedge results presentation. The impact of this is that the financial reporting for hedging relationships and the risk management activities of an entity will be better aligned.

  • Conceptual Framework for Financial Reporting [CITATION Fin16 l 1033 ] –FASB has issued conceptual frameworks that govern financial reporting since 1978. It thereafter issued six more by the year 2000. FASB and IASB commenced a joint conceptual framework project in 2004, which led to the development of Conceptual Framework 8 – Chapter 1 and Chapter 3. The latter chapter covered issues relating to qualitative traits of useful financial information while the first chapter covered issues relating to the objective of general purpose financial reporting. This exposure draft, if approved, will comprise the seventh chapter in Conceptual Framework, and it places focus on concepts for measurement and presentation.

  • Clarifying when a not-for-profit entity that is a general partner should consolidate a for-profit limited partnership or similar entity [CITATION Fin162 l 1033 ] – the main entities impacted by this proposed standard are Not-for-Profits (NFPs) that are general partners of a for-profit limited partnership of any other similar entity, which may include limited liability companies which have functionally equivalent governing provisions to limited partnerships.

SEC ProposedRules

The Securities and Exchange Commission (SEC) is a federal governmentagency legally mandated to develop and enforce accounting practicesfor companies whose securities are offered for sale to the generalpublic [CITATION ENe10 p 28 l 1033 ]. Similar to the exposure draftprocess employed by FASB, the SEC submits proposed rules for publiccommentary and feedback. The following list highlights the two mostrecent SEC proposed rules.

  • Exhibit Hyperlinks and HTML Format[CITATION Sec16 l 1033 ] – This rule mainly targets registrants filing registration statements and current and periodic reports which are subject to the exhibit requirements stipulated in Item 601 of Regulation S-K. The proposed rule suggests that such registrants should include a hyperlink to each of the exhibits listed in the exhibit index of each filing. For this to be possible, the proposed rules also add that all such filings by the earlier mentioned registrants should be submitted in HyperText Markup Language (HTML) format. The development of this proposed amendment is in accordance with SECs efforts to increase the efficacy of the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system which it implemented in 1984. The purpose of this system was to automate the dissemination, processing, and receipt of documents which are filed under federal securities law.

  • Disclosure Update and Simplification [CITATION Sec161 l 1033 ] – The purpose of this proposed rule is to make amendments to particular disclosure requirements which may have become superseded, outdated, overlapping, duplicative, or redundant, with respect to other SEC disclosure requirements, International Financial Reporting Standards (IFRS), GAAP, or changes within the information environment. Furthermore, the SEC through this proposed amendment hopes to invite comments that will help them decide whether certain disclosure requirements will be forwarded to FASB for possible inclusion in GAAP, or will be retained, modified, or eliminated. The overall aim of the proposed amendments is to promote information disclosure to investors, while simplifying compliance efforts, without making major alterations to the total mix of information investors are supplied with.

SentenceRewriting

  1. The employee reported the fraud.

  2. I enjoyed the book because the author described the seven fraud investigation techniques so well.

AssetClassification

Assets can be defined as resources which an entity or company owns,and anticipates to receive future benefit from. There are fiveprimary asset categories: current assets intangible assetsproperty, plant, and equipment long-term investments and, otherassets. Current assets are those which can be converted into cashwithin one year or one operating cycle of the asset, whichever islonger [CITATION Cur07 p 296 l 1033 ]. An asset`s operating cyclerefers to the time between when raw materials are purchased and whensales of products made from these raw materials occur. Financialstatements typically comprise five main items under the currentassets section:

  • Cash and cash equivalents – This refers either to actual currency that can be utilized or short-term investments that will mature in less than three month. Examples of cash equivalents include three-month money market instruments, time deposits, or BSP treasury bills. Cash can be in the form of cash on hand, which refers to actual currency or items such as manager’s or cashier’s checks, bank drafts, traveler’s checks, and money orders. Cash may also refer to cash in the bank or cash funds such as dividend funds, payroll funds, or petty cash funds.

  • Receivables – this is anything owed to the entity by a customer or other person for money, services, or goods offered. Examples include interest receivable, notes receivable, and accounts receivable.

  • Inventories – comprises completed products, raw materials, or work-in-progress products

  • Short-term investments – while some short-term investments may be categorized as cash equivalents due to their swift maturity, short-term investments typically comprise: available-for-sale, trading, and, held to maturity investments

  • Prepaid expenses – this is an advance payment for expenses or services to be utilized in the future, for example, prepaid insurance and rent deposit.

The following chart distinguishes between the different types ofassets.

References

Curley, M. T., &amp Walker, J. A. (2007). Barron`s Stockbroker Examination (Third ed.). Hauppauge, New York: Barron`s Educational Series.

Financial Accounting Standards Board. (2016a, August 11). Concepts Statement 8 – Conceptual Framework for Financial Reporting. Retrieved from FASB.org: http://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176168366904&ampacceptedDisclaimer=true

Financial Accounting Standards Board. (2016b, September 8). Derivatives and Hedging (Topic 815). Retrieved from FASB.org: http://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176168427518&ampacceptedDisclaimer=true

Financial Accounting Standards Board. (2016c, August 3). Not-for-Profit Entities – Consolidation (Subtopic 958-810). Retrieved from FASB.org: http://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176168349510&ampacceptedDisclaimer=true

Needles, B. E., &amp Powers, M. (2010). Financial Accounting. Mason, Ohio: Cengage Learning.

Securities and Exchange Commission. (2016a, July 13). Disclosure Update and Simplification. Retrieved from SEC.gov: https://www.sec.gov/rules/proposed/2016/33-10110.pdf

Securities and Exchange Commission. (2016b, August 31). Exhibit Hyperlinks an HTML Format. Retrieved from SEC.gov: https://www.sec.gov/rules/proposed/2016/33-10201.pd