OMSA MGT 8803 Financial Accounting Summer 2025 |
Questions & Answers | Grade A | 100% Correct
What are the three forms of business? - answerProprietorship, partnership, and corporations
A proprietorship/partnership has limited liability? - answerFalse
What are the accounting assumptions? - answerSeparate entity, consistent unit of measurement
(currency), going concern, periodicity, and materiality
Materiality - answeronly information that would influence the decisions of a reliant party need be
disclosed
Periodicity - answerpresume arbitrarily picked time period and repeat financial results of that time
Going Concern - answerthe presumption that the entity will continue to operate in the future
Who uses financial statements? - answerinvestors, creditors, financial analysts, gov't agencies
GAAP - answerGenerally Accepted Accounting Principles. The standards and rules that accountants
follow while recording and reporting financial activities.
Financial Accounting Standards Board (FASB) - answerthe private board that establishes the generally
accepted accounting principles used in the practice of financial accounting
IFRS (International Financial Reporting Standards) - answerA standardized set of rules and practices in
business accounting used in many countries as an alternative to US GAAP.
, What are the qualities of financial statements? - answerUnderstandability, timeliness, full disclosure,
comparability, objectivity, decision relevance
Full Disclosure Principle - answerrequires that companies disclose all circumstances and events that
would make a difference to financial statement users
What are the three types of financial statements? (gone over so far) - answerBalance sheet, income
statement, statement of cash flows
Why is accuracy not a quality of a financial statement? - answerToo much judgment is involved
Which quality of financial statements conflicts with objectivity? - answerDecision relevance
What are the three categories of a balance sheet? - answerassets, liabilities, and owner's equity
What is the accounting equation? - answerAssets = Liabilities + Owner's Equity
Accounting equation details - what is the left side? - answerresources available
Accounting equation details - what is the right side? - answersources of funding provided by
creditors/who has claim to assets
Assets - answerresources owned or rights to receive resources
What are the categories of assets? - answerphysical, intangible, legal rights
What are some common asset accounts? - answercash. AR, buildings & equipment, inventory,
copyright/patents
Historical Cost Principle - answerAn accounting principle that states that companies should record assets
at their cost.
Questions & Answers | Grade A | 100% Correct
What are the three forms of business? - answerProprietorship, partnership, and corporations
A proprietorship/partnership has limited liability? - answerFalse
What are the accounting assumptions? - answerSeparate entity, consistent unit of measurement
(currency), going concern, periodicity, and materiality
Materiality - answeronly information that would influence the decisions of a reliant party need be
disclosed
Periodicity - answerpresume arbitrarily picked time period and repeat financial results of that time
Going Concern - answerthe presumption that the entity will continue to operate in the future
Who uses financial statements? - answerinvestors, creditors, financial analysts, gov't agencies
GAAP - answerGenerally Accepted Accounting Principles. The standards and rules that accountants
follow while recording and reporting financial activities.
Financial Accounting Standards Board (FASB) - answerthe private board that establishes the generally
accepted accounting principles used in the practice of financial accounting
IFRS (International Financial Reporting Standards) - answerA standardized set of rules and practices in
business accounting used in many countries as an alternative to US GAAP.
, What are the qualities of financial statements? - answerUnderstandability, timeliness, full disclosure,
comparability, objectivity, decision relevance
Full Disclosure Principle - answerrequires that companies disclose all circumstances and events that
would make a difference to financial statement users
What are the three types of financial statements? (gone over so far) - answerBalance sheet, income
statement, statement of cash flows
Why is accuracy not a quality of a financial statement? - answerToo much judgment is involved
Which quality of financial statements conflicts with objectivity? - answerDecision relevance
What are the three categories of a balance sheet? - answerassets, liabilities, and owner's equity
What is the accounting equation? - answerAssets = Liabilities + Owner's Equity
Accounting equation details - what is the left side? - answerresources available
Accounting equation details - what is the right side? - answersources of funding provided by
creditors/who has claim to assets
Assets - answerresources owned or rights to receive resources
What are the categories of assets? - answerphysical, intangible, legal rights
What are some common asset accounts? - answercash. AR, buildings & equipment, inventory,
copyright/patents
Historical Cost Principle - answerAn accounting principle that states that companies should record assets
at their cost.
