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Accounting for decision makers C213 WGU 500 questions and answers 2024
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Accounting for decision makers C213 WGU 500 questions and answers 2024
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Accounting for decision makers C213 WGU 500questions and answers 2024
AOCI: Accumulated other comprehensive income.Market related gains and losses that
are not included on the income statement. - MARKET EVENTS that result in an
increase or decrease in equity are:
Classified balance sheet - Breaking items down into current and long term results
(current=with in one year)
Entity Concept - small and large businesses
International Property rules - What allows property, plant, and equipment (PPE) to be
reported at CURRENT APPRISED VALUE rather than historical cost?
NO - Are assets recorded at liquidity prices?
Revenue, expenses, and net income. - The income statement contains what three
things?
Income statement equation - Revenue-Expenses=Net Income
Revenue (gains) - Amount of assets created from the sale of goods or services. Also,
REVENUE CAN BE GENERATED BY SATISFYING LIABILITIES. One SOURCE of an
asset.
Expenses (losses) - Amnt of ASSETS CONSUMED in generating revenues. Expenses
are also used when liabilities are created in generating revenues. one USE of an asset.
It is ONE way to create a liability.
NEVER. Divedends are not expenses. - Are Dividends located on the income
statement?
Net income - Overall measure of a companies economic performance during a period of
time.
Never - Are revenues assets?
Never - Are expenses liabilities?
Earnings per share (EPS) - Net income / outstanding number of share stock.
,Revenue recognition - Recognize revenue when value has been delivered to the
customers. Not before or after.
Operating, investing, and financing activities - Statement of cash flows. Inflow of cash
comes from what three activities.
Operating activities - Things that a business does every day hundreds of times
Investing activities - NOT investing in stock or bonds. It is investing in the productive
capacity of the business. Time to time things, not usually daily, Ex: buying, selling long
term assets such as buildings, equipment, land.
Financing activities - Obtaining the capital or financing that a business requires to buy
needed resources. Time to time things, not every day. Ex: Borrowing, repaying,
receiving cash invested by shareholders, and paying dividends.
Summary of significant accounting policies, additional info about summary totals,
disclosure of info not recognized, and supplementary info. - Notes to the financial
statement:
The SEC - The external audit is enforced by what?
External. But, private companies who want to provide assurance to a banker or new
investor may do an external audit too. - Public companies by law have to do what kind
of audit?
Become a CPA (certified public accountant), CE, CPA exam, and be completely
INDEPENDENT to any company you audit. - To become an external auditor you have
to?
General accepted accounting principles (GAAP), and General accured auditory
standards (GAAS). Certifies that the companies information is not misleading. - An audit
certifies what two things?
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.
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