D196 WGU - Study Guide Questions and
answers graded A+
What is the role and purpose of accounting ? - ANSWER-Role: To help track
income and expenditures, and to provide investors, management, and
government with financial information.
Purpose: To accumulate, measure, and communicate financial information about
businesses and other organizations.
· Who uses accounting information and why? - ANSWER-Potential investors and
creditors use accounting information, but basically everyone uses accounting
information. They use it to make internal and external business decisions.
· What are the important influences on accounting? - ANSWER-Important
influences on accounting is the development of the "generally accepted
accounting principles"(GAAP), international business and ethical consideration.
· What is the role of ethics in accounting? - ANSWER-Being an accountant
requires honesty and integrity, as well as professional judgement. So having
ethics in accounting is very important.
What are the three main functions of accounting? - ANSWER-The 3 main
functions of accounting are: Analyzing, Bookkeeping, and Evaluating(ABE).
The Financial Accounting Standards Board(FASB) - ANSWER-An organization
responsible for studying accounting issues and establishing standards
a) Private group
b) Public process
c) Establishes GAAP
,The Governmental Accounting Standards Board(GASB) - ANSWER-A private,
non governmental organization who sets accounting and financial reporting
standards for state and local governments
Securities and Exchange Commission(SEC) - ANSWER-Regulates stock
exchanges
a) Has legal authority to regulate financial markets and accounting
b) Usually defers to the FASB on accounting matters
The Public Company Accounting Oversight Board(PCAOB) -
ANSWER-Oversees all accounting firms.
Internal Revenue Service(IRS) - ANSWER-Collects and regulates income taxes
International Accounting Standards Board(IASB) - ANSWER-The FASB of the
world(except the USA)
Assets - ANSWER-assets are what we OWN.
Common Assets:
-) Cash
-) Accounts receivable
-) Inventory
-) Buildings
-) Prepaid
Liabilities - ANSWER-An obligation to pay cash, transfer other assets, or provide
services to someone.
A) Liabilities are what we OWE.
B) Common Liabilities:
-) Accounts Payable
-) Taxes Payable
-) Mortgage Payable
-) Unearned Revenue
Owners Equity - ANSWER-The owners share of earnings.
A) Sources of equity:
-) Capital/Common Stock
, -) Retained Earnings
What is the Accounting Cycle and how does it work? - ANSWER-The accounting
cycle is the procedure for analyzing, recording, summarizing, and preparing the
transactions of a business. The accounting cycle works by turning transactions
into financial statements through these steps:
Step 1: Analyze Transactions
Step 2: Record the effects of transactions
Step 3: Summarize the effects
Step 4: Prepare reports
· What is the Accounting Equation? - ANSWER-Assets=Liability+Equity(ALE)
Can you explain the 'expanded' accounting equation? -
ANSWER-Assets=Liabilities+(Capital Stock+Cumulative Net Income-Cumulative
Dividends)
What are the four financial statements covered in this module? -
ANSWER-Balance Sheet, Income Statement, Statement of Cash Flows,
Statement of Retained Earnings
Can you define and explain the purpose of the Balance Sheet and its
components? - ANSWER-A balance sheet is the statement of the company's
financial position at a certain period, and records the company's assets, liabilities,
and owners' equity. The purpose of a balance sheet is to report the resources of
a company, the company's obligations, and the owners' equity.
The components of a balance sheet are: Assets, Liabilities, and Owner's equity.
-) The balance sheet equation: Assets=Liabilities+Equity(ALE).
-) Classified Balance Sheet: A balance sheet that distinguishes between current
and long-term assets.
Can you define and explain the purpose of the Income Statement and the
components that it contains? - ANSWER-An income statement is the statement
of earnings, and records the amount of revenue(profits) generated, and costs
incurred(expenses) by a company during a period of time(a month, a quarter, a
year).
answers graded A+
What is the role and purpose of accounting ? - ANSWER-Role: To help track
income and expenditures, and to provide investors, management, and
government with financial information.
Purpose: To accumulate, measure, and communicate financial information about
businesses and other organizations.
· Who uses accounting information and why? - ANSWER-Potential investors and
creditors use accounting information, but basically everyone uses accounting
information. They use it to make internal and external business decisions.
· What are the important influences on accounting? - ANSWER-Important
influences on accounting is the development of the "generally accepted
accounting principles"(GAAP), international business and ethical consideration.
· What is the role of ethics in accounting? - ANSWER-Being an accountant
requires honesty and integrity, as well as professional judgement. So having
ethics in accounting is very important.
What are the three main functions of accounting? - ANSWER-The 3 main
functions of accounting are: Analyzing, Bookkeeping, and Evaluating(ABE).
The Financial Accounting Standards Board(FASB) - ANSWER-An organization
responsible for studying accounting issues and establishing standards
a) Private group
b) Public process
c) Establishes GAAP
,The Governmental Accounting Standards Board(GASB) - ANSWER-A private,
non governmental organization who sets accounting and financial reporting
standards for state and local governments
Securities and Exchange Commission(SEC) - ANSWER-Regulates stock
exchanges
a) Has legal authority to regulate financial markets and accounting
b) Usually defers to the FASB on accounting matters
The Public Company Accounting Oversight Board(PCAOB) -
ANSWER-Oversees all accounting firms.
Internal Revenue Service(IRS) - ANSWER-Collects and regulates income taxes
International Accounting Standards Board(IASB) - ANSWER-The FASB of the
world(except the USA)
Assets - ANSWER-assets are what we OWN.
Common Assets:
-) Cash
-) Accounts receivable
-) Inventory
-) Buildings
-) Prepaid
Liabilities - ANSWER-An obligation to pay cash, transfer other assets, or provide
services to someone.
A) Liabilities are what we OWE.
B) Common Liabilities:
-) Accounts Payable
-) Taxes Payable
-) Mortgage Payable
-) Unearned Revenue
Owners Equity - ANSWER-The owners share of earnings.
A) Sources of equity:
-) Capital/Common Stock
, -) Retained Earnings
What is the Accounting Cycle and how does it work? - ANSWER-The accounting
cycle is the procedure for analyzing, recording, summarizing, and preparing the
transactions of a business. The accounting cycle works by turning transactions
into financial statements through these steps:
Step 1: Analyze Transactions
Step 2: Record the effects of transactions
Step 3: Summarize the effects
Step 4: Prepare reports
· What is the Accounting Equation? - ANSWER-Assets=Liability+Equity(ALE)
Can you explain the 'expanded' accounting equation? -
ANSWER-Assets=Liabilities+(Capital Stock+Cumulative Net Income-Cumulative
Dividends)
What are the four financial statements covered in this module? -
ANSWER-Balance Sheet, Income Statement, Statement of Cash Flows,
Statement of Retained Earnings
Can you define and explain the purpose of the Balance Sheet and its
components? - ANSWER-A balance sheet is the statement of the company's
financial position at a certain period, and records the company's assets, liabilities,
and owners' equity. The purpose of a balance sheet is to report the resources of
a company, the company's obligations, and the owners' equity.
The components of a balance sheet are: Assets, Liabilities, and Owner's equity.
-) The balance sheet equation: Assets=Liabilities+Equity(ALE).
-) Classified Balance Sheet: A balance sheet that distinguishes between current
and long-term assets.
Can you define and explain the purpose of the Income Statement and the
components that it contains? - ANSWER-An income statement is the statement
of earnings, and records the amount of revenue(profits) generated, and costs
incurred(expenses) by a company during a period of time(a month, a quarter, a
year).
