ACCOUNTING QUESTIONS AND ANSWERS-GRADE A+
VERIFIED
Accounting - the process of measuring, interpreting, and communicating financial
information to enable people inside and outside the firm to make informed decisions
Who are the major users of accounting information? - owners, stockholders, potential
investors, creditors
Management
Employees, union officials
Lenders, suppliers
Government agencies, economic planners, and consumer groups
Three major business activities in which accountants play a major role - financing activities
provide necessary funds to start/expand a business
Investing activities provide valuable assets required to run a business
Operating activities focus on selling goods/services, but also consider expenses as
important elements of sound financial management
What is gaap? - generally accepted accounting principles
Rules for accounting in the us
Fasb - financial accounting standards board
Makes the rules for gaap
Sec - us securities and exchange commission
Chief federal regulator of financial markets and accounting industry
, Has authority to establish financial accounting and reporting standards for publicly held
companies
Sox - sarbanes-oxley act
Increased the reporting requirement for publicly traded companies
Created because of decline in public trust
Why ceo's responsible to know exactly what their people are doing because of sox
Double-entry bookkeeping - each transaction must have an offsetting transaction
4 major financial statements - balance sheet
Income statement
Statement of owners' equity
Statement of cash flows
Difference between a current and a long-term asset - current: cash/other assets that are
expected to be converted to cash within a year
Long-term: assets that are useful for more than 1 year
Balance sheet - what a company owns
What a company owes
Owners'/shareholder's equity leftover
Only accurate for one day (snapshot in time)
Why is a a balance sheet useful? - can they pay their bills?
How much money has been invested in them?
VERIFIED
Accounting - the process of measuring, interpreting, and communicating financial
information to enable people inside and outside the firm to make informed decisions
Who are the major users of accounting information? - owners, stockholders, potential
investors, creditors
Management
Employees, union officials
Lenders, suppliers
Government agencies, economic planners, and consumer groups
Three major business activities in which accountants play a major role - financing activities
provide necessary funds to start/expand a business
Investing activities provide valuable assets required to run a business
Operating activities focus on selling goods/services, but also consider expenses as
important elements of sound financial management
What is gaap? - generally accepted accounting principles
Rules for accounting in the us
Fasb - financial accounting standards board
Makes the rules for gaap
Sec - us securities and exchange commission
Chief federal regulator of financial markets and accounting industry
, Has authority to establish financial accounting and reporting standards for publicly held
companies
Sox - sarbanes-oxley act
Increased the reporting requirement for publicly traded companies
Created because of decline in public trust
Why ceo's responsible to know exactly what their people are doing because of sox
Double-entry bookkeeping - each transaction must have an offsetting transaction
4 major financial statements - balance sheet
Income statement
Statement of owners' equity
Statement of cash flows
Difference between a current and a long-term asset - current: cash/other assets that are
expected to be converted to cash within a year
Long-term: assets that are useful for more than 1 year
Balance sheet - what a company owns
What a company owes
Owners'/shareholder's equity leftover
Only accurate for one day (snapshot in time)
Why is a a balance sheet useful? - can they pay their bills?
How much money has been invested in them?
