Exam (elaborations)

FINANCIAL ACCOUNTING - EXAM 1 Questions & Answers

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Course
FINANCIAL ACCOUNTING

Institution
FINANCIAL ACCOUNTING

Definition of Accounting - ANSWERSthe information system that measures business activities, processes the information into reports, and communicates the results to decision makers Financial Accounting is based on _____________ __________. - ANSWERSExternal Users Double Entry System - ANSWERSa...

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Uploaded on October 27, 2024
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Written in 2024/2025
Type Exam (elaborations)
Contains Questions & answers

definition of accounting
financial accounting exam 1 questions answers
financial accounting exam 1 stuvia
financial accounting is based on

Institution FINANCIAL ACCOUNTING
Course FINANCIAL ACCOUNTING

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FINANCIAL ACCOUNTING - EXAM 1
Questions & Answers
Definition of Accounting - ANSWERSthe information system that measures business
activities, processes the information into reports, and communicates the results to
decision makers

Financial Accounting is based on _____________ __________. - ANSWERSExternal
Users

Double Entry System - ANSWERSa method of accounting in which each transaction is
recorded such that the sum of assets is equal to the sum of the company's liabilities and
its shareholder's equity

Accounting Equation - ANSWERSAssets = Liabilities + Shareholder's Equity

Stockholder's Equity = - ANSWERSCommon Stock + Retained Earnings

Retained Earnings = - ANSWERSRevenues - Expenses - Dividends

Expanded Accounting Equation - ANSWERSAssets = Liabilities + Common Stock +
Revenues - Expenses - Dividends

Users of accounting information may be both __________ and ___________. -
ANSWERSinternal and external

Internal Users - ANSWERSManagement, Employees, Owners

External Users - ANSWERSCreditors, Tax Authorities, Investors, Customers,
Regulatory Authorities

Financial Accounting focuses primarily on
______________________________________________________________________
_____. - ANSWERSreporting financial information related to the financial position of the
company, the results of its operations, and its cash flows to EXTERNAL users.

Managerial Accounting focuses on
______________________________________________________________________
_______________________. - ANSWERSthe processes that generate information that
can be used by INTERNAL management and employees to make better decisions
about the day-to-day operations of the company

, Public accounting firms - ANSWERSoffer expert service to the general public through
the services they preform

Assurance or Auditing - ANSWERSan independent certified public accountant (CPA)
examines the financial statements of companies and expresses an opinion as to the
fairness of presentation

Taxation - ANSWERSTax specialists provide tax advice and planning, prepare tax
returns, and represent clients before gov. agencies.

Advisory Services - ANSWERSassist in the installation of basic accounting and internal
control systems (financial services, information technology, and management advisory
services)

Public accounting jobs include: - ANSWERSadvisory services, taxation, public
accounting firms, and assurance/auditing

Corporate accounting jobs include: - ANSWERSgeneral accountants, cost accountants,
controllers, financial analysts, system analysts, internal auditors, and tax managers

Governmental accounting jobs include: - ANSWERSfederal, state, or local government
jobs (IRS, the SEC, and the FTC)

Accounting Standard Setting in the US - ANSWERSFASB (current) and SEC

FASB - ANSWERSFinancial Accounting Standards Board, privately funded, creates the
rules and standards that govern financial accounting, standards apply to all companies

SEC - ANSWERSSecurities and Exchange Commission, oversees the US financial
markets, only governs publicly traded companies

GAAP - ANSWERSGenerally Accepted Accounting Principles are broad reporting
guidelines representing the best alternative methods of accounting selected from many
possible alternative methods

GAAP Relevant: - ANSWERSThe info allows users to make a decision (it must be
material and have predictive and confirmatory value)

GAAP Faithfully Representative: - ANSWERSThe info is complete, neutral, and free
from material error

Accounting Assumptions - ANSWERS1. Economic (Business or Accounting) Entity
Assumption
2. Cost Principle
3. Monetary Unit Assumption
4. Going Concern Assumption

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