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MHA 706 Module 2 Exam/92 Questions and Answers Fully Solved!!!
MHA 706 Module 2 Exam/92 Questions and Answers Fully Solved!!!
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MHA 706 Module 2 Exam/92Questions and Answers Fully
Solved!!!
Financial Accounting - -involves identifying, recording and communicating
the operational results and status of organization. (i.e. income statement,
statement of changes in equity, balance sheet, and statement of cash flows)
-Do not for profit organizations have to prepare financial statements? - -Yes-
they also have stakeholders and managers that have an interest in financial
reporting
-Should the preparation and presentation of financial accounting data be
regulated? - -Yes, it is important to have financial reporting that is accurate
and based on reliable data.
-SEC - -has legal authority to regulate the form and content of financial
statements
-GAAP- applies only to financial accounting statements - -The conventions
that have evolved from the pronouncements and rulings of the implementing
organizations constitute a set of guidelines for the preparation of financial
accounting statements
-Does GAAP remain static over time? - -no, because business practices are
continuously evolving, so GAAP also has to adapt accordingly.
-Assumptions - -accounting entity, going concern, periodicity, and monetary
unit
-Accounting entity - -the specific entity for which the statements apply can
be defined
-Going concern - -it is assumed that the entity will have an indefinite
lifetime rather than be liquidated in the near future
-Monetary unit - -in the US, the unit is the US dollar, unadjusted for inflation
and deflation
-Historical costs - -Requires most assets to be valued at acquisition
(historical) costs rather than fair market (current) value
, -Revenue recognition - -Revenues must be recognized in the period in
which they are realizable and earned
-Expense matching - -Expenses must be matched (in time) to the related
revenues
-Full disclosure - -Financial statements must contain a complete picture of
the economic (financial) events of the organization
-Which two principles are related? - -Revenue recognition and full
disclosure- financial statements must capture a complete picture of the
economic or financial events of the organization
-Materiality - -To keep statements manageable, only entries that are
important to the operational and financial status of the organization need be
separately identified
-Cost Benefit - -Financial statements cannot report all possible information
that every potential user might find relevant. When deciding what
information should be reported and how it will be done, standard setters
must determine whether the benefits outweigh the associated costs
-cash accounting recognizes - -an event when a cash transaction takes
place
-accrual accounting recognizes - -an even when a cash obligation is created
(is required by GAAP)
-Transaction - -is an exchange of goods (including cash) or services from
one individual or business to another
-unique activity - -once a transaction is identified, it must be recorded or
posted to an account
-chart of accounts - -assign numeric identifiers to individual accounts
-Double entry system - -journal entries are always posted twice
-T accounts - -to handle the double entries
-Journal data - -income statement, statement of changes in equity, balance
sheet, and statement of cash flows
-Disseminating financial statements- annual report - -It begins with a verbal
discussion of current operating results and expectations for the future.
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