(Top 2024/2025 EXAM REVIEW PAPER ) Accounting for decision makers C213 WGU, Exam Questions and answers, Graded A+

Accounting for decision makers C213 WGU, Exam Questions and answers, Graded A+ 1. Prepare 2. Analyze 3. Gather 4. Make decisions 5. Implement 6. Observe. - -Accounting steps. Inside, Internal - -Managerial info is inside or outside the business? True. Financial accounting is only outside. Managerial accounting can be inside AND outside. - -True or false, managerial accounting uses BOTH managerial and financial accounting? Outside, External, includes lenders and investors - -Financial is inside or outside the business? Balance sheet, income statement, and statement of cash flows - -The financial statement includes what 3 documents Balance Sheet - -Point in time, Assets (resources) and liabilities (obligations) Income Statement - -Period of time (usually 1 year), amount of profit made Statement of Cash flows - -Period of time, where money came from, and where it went. Inflow and outflow of cash (Cash Flows). Change in money for the period. Balance sheet equation - -Assets= liabilities + equity Revenue equation - -Net income=Revenue - Expenses Operating, investing, and financial activities - -The statement of cash flows includes what three activities FASB: Financial accounting standards. Private, no government involvement. It is a public process, includes individuals experienced in business and accounting (7 members). - -The decision makers in the U.S. (accounting rules) GAAP: General accepted accounting principles - -Developed by accounting rule makers. No Legal authority. comparability - -We need accounting rules for... SEC: Security and exchange commission. Located in Article 1, Sec 8, Clause 3 - -U.S. gov agency responsible for ensuring that investors, creditors, and other financial statement users are provided with reliable information. It watches behavior in financial markets. Registration statements (prospectus), Form 10-K, Form 10-Q, and schedule 14A (proxy statement). These are all publicly viewable. - -What forms do the SEC regulate? Oversees stock exchanges, can suspend a company, investigate and suspect violations of the SEC rules. - -What does the SEC do? YES. The SEC has legal authority to establish accounting rules and disclosure requirements. - -Does the SEC have legal authority? USA congress-SEC-FASB - -Financial accounting rule per the US constitution FASB: Financial accounting standards board - -The SEC created the GAAP (has no legal authority) - -FASB created AIPCA: American INSTITUTE of certified public accountants. - -What sets auditory standards, continue education credits, CPA exam, and is the code of professional conduct? Only CPA's: Certified public accountants. - -Who is the only person who can sign audit reports? PCAOB: Public company accounting oversight board. - -The Sarbanes-Oxley Act "SOX" created? Under supervision of the SEC. - -PCAOB is under supervision of? PCAOB: Public Company Accounting OVERSIGHT Board. - -Who appoints members, approves actions, gov standards, inspections, and investigations? It is a private group and OVERSEES. AUDITORS? U.S. Gov agency that collects and regulates income taxes. Their primary goal is to collect revenue. - - IRS Economic income and accounting income books. & Tax income, and cash flow books. - -There are two sets of books. Tax Books and Financial accounting books. Similar to the FASB, but not 100% the same. It is international, everywhere but the U.S. - -IASB: Internatonal Accounting Standard Board Who enforces and national policies. - -Barriers to international convergence are? Condorsement - -Rules set centrally, but legally adopted and enforced locally? The SEC, SOX, and PCAOB. - -To increase government regulation, one would use: Reduce uncertainty and allows lenders and investors to target their financing and investing to the level of risk they are willing to take. - -Financial statements Adudit - -A financial statement that furthermore decreases uncertainty. Income Statement - -Provides accountants the best attempt at measuring the economic performance of a company. Balance sheet - -Mother of all financial statements. Accounting equation - -Assets=liabilities+equity Assets (resoures) - -Resources owned or controlled by a company that will provide probable future economic benefit. Liabilities (obligations) - -Obligations that require the probable future sacrifice of economic benefits in the form of the transfer of assets or the providing of service