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ACG 2021 Chapter 1 Questions and Solutions
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  • ACG 2021
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  • ACG 2021

The sole proprietorship form of business organization must have only one owner. Which of the following is considered to be an internal user of accounting data for a given business? Management Which of the following is the most appropriate definition of accounting information? The information syst...

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  • August 11, 2024
  • 6
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • acg 2021 chapter 1 questions and solutions
  • the sole proprietorship form of business organizat
  • which of the following is considered to be an inte

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  • ACG 2021
  • ACG 2021

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Chapter 1 ACG 2021 Study Questions
and Correct Answers
Identifying ✅Select transactions and events

Recording ✅input, measure, and log

Communicating ✅prepare, analyze, and interpret

External Users ✅Persons using accounting information who are not directly involved in
running the organization.
EX. Lenders, shareholders, governors, consumer groups, external auditors, customers

Internal Users ✅Persons using accounting information who are directly involved in
managing the organization.
EX. officers, managers, internal auditors, sales staff, budget officers, controllers.

Share holder ✅A person who invests in a corporation by buying stock and is a partial
owner

controllers ✅

auditors ✅people who make inspections of a company's financials and accounts.
Bigger companies use internal auditors more often because they are publicly traded,
meaning they need to receive an external audit legally. Auditing is important for many
users, especially shareholders

publicly traded companies ✅companies that offer shares of stock or partial ownership
to those that wish to buy into that company

Private company ✅A company that is owned by a person, family, or small group of
investors that does not sell shares of stock in the company to the public.

CPA ✅certified public accountant

Goal of accounting ✅provide useful information for decisions, meaning it can be
trusted.

Ethics ✅Beliefs that distinguish right and wrong. Accepted standards of good and bad
behavior.

, Fraud Triangle: Opportunity ✅The ability of a person to take actions that perpetrate a
fraud.
ex. unrestricted access to all functions of an accounts payable system enables an
employee to generate false vendor payments

Fraud Triangle: Rationalization ✅Fraud perpetrators need to rationalize their action as
acceptable. Fails to see criminal nature.
ex. I'm doing it for the good of the company.

Fraud Triangle: Financial Pressure ✅Must have financial pressure to commit fraud like
unpaid bills.
ex. Cannot pay light bill with the money they have

GAAP (Generally Accepted Accounting Principles) ✅The standards and rules that
accountants follow while recording and reporting financial activities. The right way to do
accounting. ONLY FOR US.

SEC (Securities and Exchange Commission) ✅an independent federal agency that
oversees the exchange of securities to protect investors. Enforces rules (GAAP).
Regulate business and commerce in the US.

FASB (Financial Accounting Standards Board) ✅the private board, made up of
accountants and business individuals, that establishes the generally accepted
accounting principles used in the practice of financial accounting

IASB (International Accounting Standards Board) ✅the private organization that
oversees the creation and governance of IFRS (GLOBAL)

IFRS (International Financial Reporting Standards) ✅identify preferred accounting
practices (GLOBAL)

General Principles ✅basic assumptions, concepts, and guidelines for preparing
financial statements

specific principles of accounting ✅detailed rules used in reporting business
transactions and events

Measurement/Cost Principle ✅Accounting information is based on actual cost. Actual
cost is considered objective. Transacted price=worth

Revenue Recognition Principle ✅The principle that companies recognize revenue
once it is earned/ service is completed. Proceeds do not need to be cash (AR).
Measure revenue by cash received + cash value of items received.

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