BUSN 70 Midterm 2 Questions And
Answers 2024 Update
accounting ANS✔✔ the recording, measurement, and interpretation of financial info
bookkeeping ANS✔✔ when a business transaction is recorded; more mechanical than accounting
dif between accountants and bookkeepers ANS✔✔ accountants have more training to interpret/analyze
financial info
certified public accountant (CPA) ANS✔✔ state certified, provides accounting services to public for a fee
-must be independent of business they serve to be objective
-can only audit someone else's work
private accountants ANS✔✔ accountants employed by large corporations, government agencies
types of accounting ANS✔✔ -financial accounting
-managerial accounting
financial accounting ANS✔✔ prepares info in very structured way for outsiders
managerial accounting ANS✔✔ prepares info for internal company analysis and decision making
What is managerial accounting's greatest concern? ANS✔✔ cash flow
,managers also use accounting statements to report the business's financial performance to
_____________ ANS✔✔ outsiders
annual report ANS✔✔ summary of firm's financial information, products, and growth plans for owners
and potential investors
financial statements are prepared in accordance with GAAP by whom? ANS✔✔ accountants hired by
companies
Who provides opinions on financial statements? ANS✔✔ auditors (auditors check the accountant's
work)
2 opinions:
1) on financial statements
2) controls (did you follow correct procedure to get correct numbers)
auditor opinions terms ANS✔✔ unqualified= good
qualified= bad
material weakness= bad
What's the single most important component of an annual report? ANS✔✔ signature of CPA
When financial statements are accurate, they are termed ___________ ANS✔✔ audited
cash flow ANS✔✔ the movement of money through an organization over a daily, weekly, monthly, or
yearly basis
budget ANS✔✔ forecasts expenses and incomes over a set period of time
,Who cares about accounting? ANS✔✔ -banks
-suppliers
-customers
-investors
-government (taxes)
-employees
-competitors
-industry analysis
What kind of info do people who care about accounting need? ANS✔✔ -accurate
-objective
-consistent
-comparable (to other companies and previous performances of own company)
Why does accounting need a set of principles and standards? ANS✔✔ So that everybody does
accounting the same way
What are the standards/principles called in the US? ANS✔✔ GAAP- Generally Accepted Accounting
Principles
Where does the GAAP come from? ANS✔✔ private organizations not related to the government and
International Financial Reporting Standards
Sarbanes-Oxley Act ANS✔✔ after accounting scandals of Enron and Worldcom in early 2000s, Congress
passed this act in July 2002 that required firms to be more rigorous in their accounting and reporting
practices
, -made firms separate consulting and auditing businesses
What board did the Sarbanes-Oxley Act establish? ANS✔✔ Public Company Accounting Oversight Board
-audit the auditors
-audit standards
audit ANS✔✔ formal evaluation of fairness and reliability of client's financial statements
Dodd-Frank Act ANS✔✔ Congress passed this in 2010 after 2008 financial crisis to strengthen the
oversight of financial institutions
-limits types of assets commercial banks can buy
-amount of capital banks must maintain
-oversight of "systematic risk"
Why does instructor think bailouts are bad? ANS✔✔ bc people take risks they normally wouldn't bc
they'll know they'll be saved
The Dodd-Frank Act gave who the responsibility of implementing the legislation? ANS✔✔ Federal
Reserve Board
assets ANS✔✔ something a firm owns (tangible + intangible)
-cash
-inventory
-land
-equipment
-buildings
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Schoolflix. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $14.99. You're not tied to anything after your purchase.