D196 Study Guide Questions and Answers Rated A What is the role and purpose of accounting? Accounting is used to accumulate, measure, and communicate financial information about organizations. This information is used to make informed decisions regarding resource usage and allocation.
Who uses acc...
what is the role and purpose of accounting accounting is used to accumulate
and communicate financial information about organizations this in
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D196 Study Guide Questions and
Answers Rated A
What is the role and purpose of accounting? ✔✔Accounting is used to accumulate, measure, and
communicate financial information about organizations. This information is used to make
informed decisions regarding resource usage and allocation.
Who uses accounting information and why? ✔✔Managerial Accounting: Internal decision
making (managers, CEO's, supervisors, etc.)
Financial Accounting: External user benefit (stakeholders, investors, tax authorities, etc.)
What are important influences on Accounting? ✔✔Development of GAAP by FASB in the U.S.
and by the IASB worldwide. International business considerations, ethical considerations.
What is the role of ethics in Accounting? ✔✔Accountants are seen by the public as ensuring that
misrepresentation of financial information does not occur.
What is the PCAOB and what does it do? ✔✔PCAOB is the Public Company Accounting
Oversight Board, and they oversee audits of public companies. Created by the SEC after passage
of the Sarbanes Oxley Act of 2002 to restore public confidence.
, Explain the accounting cycle. ✔✔1. Analyze transactions
2. Record effects of transactions
3. Summarize effects of transactions
3a. Post journal entries
3b. Prepare trial balance
4. Prepare financial reports
4a. Adjust journal entries
4b. Prepare financial statements
4c. Close books
What is the basic accounting equation? ✔✔Assets (resources, cash, equipment)
=
Liabilities (method of financing req. repayment)
+
Owner's Equity (method of financing NOT req. repayment)
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