WGU c213 study guide Questions and Answers Fully Solved 100%
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WGU c213
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WGU C213
Current Trends changing Accounting: Globalization - Answer-As more and more
business do business globally, capital flows more freely across national boundaries.
This means investors can choose to invest in firms all over the planet. To help them
make investment decisions, the global accounting a...
WGU c213 study guide
Current Trends changing Accounting: Globalization - Answer-As more and more
business do business globally, capital flows more freely across national boundaries.
This means investors can choose to invest in firms all over the planet. To help them
make investment decisions, the global accounting and regulatory communities are
working to bring accounting standards around the world into agreement the IASB was
one step in that direction, but nations still control the accounting standards used within
their borders and so much of the standardization is being done through voluntary
cooperation
direct method - Answer-The operating activities section of a statement of cash flows
prepared using the direct method is, in effect, a cash-basis income statement. Unlike
the indirect method, the direct method does not start with net income. Instead, this
method reports directly the major classes of operating cash receipts and payments of
an entity during a period. The direct method is favored by many users of financial
statements because it is easy to understand.
statement of cash flows - Answer-reports the amount of cash collected and paid out by
a company in the following three types of activities: operating, investing, and financing
over a period of time. (Reference topic 1.2)
Fin Statement Users: Lenders - Answer-Banks use companies' financial statements in
making decisions about commercial loans. The financial statements are useful because
they help the lender predict the future ability of the borrower to repay the loan.
Fin Statement Users: Investors - Answer-Investors want information to help them
estimate how much cash they can expect to directly receive from the business in the
future if they invest in it now.
Fin Statement Users: Company Management - Answer-Managers use financial
accounting data to formulate company goals, to compute bonuses for employees, and
to illuminate company weaknesses.
Fin Statement Users: Suppliers and Customers - Answer-Suppliers, customers, and
employees use financial statements to tell them about the long-run prospects of a
company.
Fin Statement Users: Employees - Answer-Financial statement data, as mentioned
earlier, are used in determining employee bonuses. In addition, financial accounting
information can help an employee evaluate the employer's ability to fulfill its long-run
promises, such as for pensions and retiree health care benefits. Financial statements
are also important in contract negotiations between labor and management.
,Fin Statement Users: Competitors - Answer-Competitors use financial accounting
information to reveal strategic opportunities within their industry.
Government Agencies - Answer-Government agencies use financial statement data to
bolster political and regulatory positions for and against companies.
purpose of accounting - Answer-Accounting is the recording of the day-to-day financial
activities of a company and the organization of that information into summary reports
used to evaluate the company's financial status.
Bookkeeping is a part of accounting. Bookkeeping refers to the process of recording
transactions into various accounts, which is the first step in accounting. The next step is
to analyze the accounts and organize them into financial statements and other useful
reports. (Reference topic 1.1)
The balance sheet - Answer-reports a company's assets, liabilities, and owners' equity.
It reports the financial position of a firm at a point in time.
income statement - Answer-reports the amount of net income earned by a company
during a period. Net income is the excess of a company's revenues over its expenses. It
reports the financial performance of a firm over a period of time.
Fin Statement Users: The Press - Answer-Reporters use financial accounting data as
background information and to indicate which companies are undergoing significant
changes in financial status. (Reference Topic 1.3)
Fin Statement Users: Politicians - Answer-Politicians use financial statement data to
bolster political and regulatory positions for and against companies.
Acct Rules: Financial Accountings Standards Board (FASB) - Answer-sets accounting
rules for the private section in the U.S.. It is a private, non-profit body established and
supported by the joint efforts of the U.S. business community, financial analysts, and
practicing accountants.
The FASB has no legal power to enforce the accounting standards it sets but maintains
its influence by carefully protecting its prestige and reputation. The standards it sets are
called Generally Accepted Accounting Standards (GAAP). These are a common set of
accounting principles, standards, and procedures that companies must follow when they
compile their financial statements. (Reference Topic 1.4)
Acct Rules: Securities and Exchange Commission (SEC) - Answer-has the legal
authority to set accounting rules, but has deferred that responsibility to the FASB in
most cases. The SEC regulates U.S. stock exchanges and seeks to create a fair
information environment in which investors can buy and sell stocks without fear that
companies who sell stocks to the general public are hiding or manipulating financial
data. (Reference topic 1.5)
, Acct Org: CPA Accreditation - Answer-The American Institute of Certified Public
Accountants (AICPA) is the professional organization of certified public accountants
(CPAs) in the United States. A CPA is someone who has taken a minimum number of
college-level accounting classes, has passed the CPA exam, and has met other
requirements set by his or her state. A CPA firm is a company that provides freelance
business advice, particularly in connection with accounting issues and executes the vast
majority of external audits in the US.
The AICPA sets ethical standards for CPAs, provides continuing education for them,
writes and grades the CPA exam, lobbies for legislation favored by CPAs, and provides
other support to CPAs. Its oversight of the CPA exam is its main role in accreditation.
However, to be accredited as a CPA you must meet the requirements of the state in
which you plan to practice. The requirements for each state are set by that state's
legislature and overseen by that state's Board of Accountancy, which is a state agency.
(Reference Topic 1.5)
Acct Org: Public Company Accounting Oversight Board (PCAOB) - Answer-determines
who can audit public companies regardless of whether the audit firm is accredited by a
state Board of Accountancy. Thus, they accredit firms that can audit public companies.
Current Trends changing Accounting: Technology - Answer-Information technology has
speeded up the pace with which accounting data and reports are produced and
dramatically increased the volume of accounting information that firms can provide to
investors. (Reference Topic 1.6)
components of a balance sheet - Answer-Balance Sheet are Assets, Liabilities, and
Equity. Both assets and liabilities are further separated into current and long term based
on whether the asset is expected to be consumed or the liability paid within a year.
Assets expected to be consumed and liabilities expected to be paid within a year are
current and those that will be consumed or paid after a year are long-term.
Equity is separated into paid in capital (also referred to as capital stock) and retained
earnings. Paid in capital is created when an owner buys stock from the firm. Retained
earnings are the accumulated earnings of the firm (i.e., net income over time) that have
not been paid back in dividends. Paid in capital also is referred to as contributed capital
while retained earnings is earned capital.
components of the income statement - Answer-Income Statement describes a
company's financial performance for a period of time. A company's expenses are
subtracted from its revenues and gains and losses are also factored in computing net
income. Net income helps explain the change in retained earnings between two
Balance Sheet dates, along with dividends and unrealized gains and losses.
A single step income statement lumps all revenues together and subtracts all expenses
to calculate net income. A multiple-step presents subtotals that highlight key
performance measures. Its categories include:
Sales or revenues
- Cost of goods sold (COGS) (Product costs of items sold)
= Gross profit
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