MIE 201 (CHAPTERS 14 - 16) STUDY GUIDE
Accounting - Answers - The recording, measurement, and interpretation of financial
information.
What is the function of accounting within and outside businesses? - Answers - To
evaluate organizational operations.
GAAP - Answers - Generally accepted accounting principles
SEC - Answers - Securities and exchange commissions
PCAOB - Answers - Public company accounting oversight board. Has the ability to file a
disciplinary order against a firm or individual temporarily or permanently prohibiting
someone from practicing accounting.
Certified public accountant (CPA) - Answers - Individual certified by the state in which
they practice to provide accounting services such as preparation of financial records
and filing of tax returns to complex audits of corporate financial records.
What are the big 4 public accounting firms? - Answers - Ernst & Young, KPMG, Deloitte,
and PricewaterhouseCoopers
Sarbanes-Oxley act - Answers - Requires firms to be more rigorous in their accounting
and reporting practices. Made accounting firms separate their consulting and auditing
businesses and punished corporate executives for inaccurate, misleading, or illegal
accounting statements.
Dodd-Frank Act - Answers - Passed in 2010 to strengthen the oversight of financial
institutions. Gave the Federal Reserve Board the task of implementing legislation
limiting types of assets commercial banks can buy, amount of capital they must
maintain, and use of derivative instruments.
Forensic accounting - Answers - Accounting that is fit for legal review. Involves
analyzing financial documents to find fraudulent entries or financial misconduct.
When did forensic accounting begin? - Answers - 1930's
Association of Certified Fraud Examiners - Answers - Certifies accounting professionals
as certified fraud examiners (CFEs)
Private accountants - Answers - Large corporations, government agencies, and other
organizations may hire them to prepare and analyze their financial statements.
, What are the 3 different titles of private accountants? - Answers - Controller, tax
accountant, and internal auditor
Certified management accountants - Answers - An accountant who has passed a
rigorous examination by the Institute of Management Accountants.
Bookkeeping - Answers - Narrower and more mechanical than accounting, limited to
routine, day-to-day recording of business transactions. Responsible for obtaining and
recording information that accountants require to analyze a firm's financial position.
What 2 things do managers and owners use financial statements for? - Answers - Aid in
internal planning and control and for external purposes like reporting to the IRS,
stockholders, creditors, customers, employees, and others interested.
Managerial accounting - Answers - Internal use of accounting statements by managers
in planning and directing the organization's activities.
What is management's greatest single concern? - Answers - Cash flow
Cash flow - Answers - Movement of money through an organization over a daily,
weekly, monthly, or yearly basis.
Budget - Answers - Internal financial plan that forecasts expenses and income over a
set period of time.
Master budgets - Answers - Budget for the entire firm
"Top-down" master budgets - Answers - Begin at upper management level and filter
down to individual department level.
"Bottom-up" budgets - Answers - Start at department or project level and are combined
at the chief executive's office.
Annual report - Answers - Summary of the firm's financial information, products, and
growth plans for owners and potential investors.
Audited - Answers - Financial statements that are signed by a CPA as an accurate
reflection of the underlying financial condition of the firm
Assets - Answers - A firm's economic resources, or items of value that it owns such as
cash, inventory, land, equipment, etc.
Liabilities - Answers - Debts the firm owes to others.
Owner's equity - Answers - All of the money that has ever been contributed to the
company that never has to be paid back.
Accounting - Answers - The recording, measurement, and interpretation of financial
information.
What is the function of accounting within and outside businesses? - Answers - To
evaluate organizational operations.
GAAP - Answers - Generally accepted accounting principles
SEC - Answers - Securities and exchange commissions
PCAOB - Answers - Public company accounting oversight board. Has the ability to file a
disciplinary order against a firm or individual temporarily or permanently prohibiting
someone from practicing accounting.
Certified public accountant (CPA) - Answers - Individual certified by the state in which
they practice to provide accounting services such as preparation of financial records
and filing of tax returns to complex audits of corporate financial records.
What are the big 4 public accounting firms? - Answers - Ernst & Young, KPMG, Deloitte,
and PricewaterhouseCoopers
Sarbanes-Oxley act - Answers - Requires firms to be more rigorous in their accounting
and reporting practices. Made accounting firms separate their consulting and auditing
businesses and punished corporate executives for inaccurate, misleading, or illegal
accounting statements.
Dodd-Frank Act - Answers - Passed in 2010 to strengthen the oversight of financial
institutions. Gave the Federal Reserve Board the task of implementing legislation
limiting types of assets commercial banks can buy, amount of capital they must
maintain, and use of derivative instruments.
Forensic accounting - Answers - Accounting that is fit for legal review. Involves
analyzing financial documents to find fraudulent entries or financial misconduct.
When did forensic accounting begin? - Answers - 1930's
Association of Certified Fraud Examiners - Answers - Certifies accounting professionals
as certified fraud examiners (CFEs)
Private accountants - Answers - Large corporations, government agencies, and other
organizations may hire them to prepare and analyze their financial statements.
, What are the 3 different titles of private accountants? - Answers - Controller, tax
accountant, and internal auditor
Certified management accountants - Answers - An accountant who has passed a
rigorous examination by the Institute of Management Accountants.
Bookkeeping - Answers - Narrower and more mechanical than accounting, limited to
routine, day-to-day recording of business transactions. Responsible for obtaining and
recording information that accountants require to analyze a firm's financial position.
What 2 things do managers and owners use financial statements for? - Answers - Aid in
internal planning and control and for external purposes like reporting to the IRS,
stockholders, creditors, customers, employees, and others interested.
Managerial accounting - Answers - Internal use of accounting statements by managers
in planning and directing the organization's activities.
What is management's greatest single concern? - Answers - Cash flow
Cash flow - Answers - Movement of money through an organization over a daily,
weekly, monthly, or yearly basis.
Budget - Answers - Internal financial plan that forecasts expenses and income over a
set period of time.
Master budgets - Answers - Budget for the entire firm
"Top-down" master budgets - Answers - Begin at upper management level and filter
down to individual department level.
"Bottom-up" budgets - Answers - Start at department or project level and are combined
at the chief executive's office.
Annual report - Answers - Summary of the firm's financial information, products, and
growth plans for owners and potential investors.
Audited - Answers - Financial statements that are signed by a CPA as an accurate
reflection of the underlying financial condition of the firm
Assets - Answers - A firm's economic resources, or items of value that it owns such as
cash, inventory, land, equipment, etc.
Liabilities - Answers - Debts the firm owes to others.
Owner's equity - Answers - All of the money that has ever been contributed to the
company that never has to be paid back.
