5110 ACCT Test with verified solutions and accurate answers and graded A+

Role of financial accounting - ANSto identify, measure, and report relevant and reliable financial information about companies to present and potential future stakeholders Who are stakeholders? - ANSStakeholders are parties with an interest in a company and are impacted by companies decision. Ex; shareholders, banks, creditors, managers, customers, etc. Separation of Ownership and Control - ANSthe need to bridge the gap between the principals (investors) and agents (management) creates information asymmetry problems and a natural demand for accounting info, standards, and audits The supply of accounting information that companies report is determined primarily by the interactions between two forces: - ANS1. Authoritative professional accounting standards 2. Choices, methods, estimates, and judgements that the company must make to apply the standards to financial statements. Financial Accounting Standards Board (FASB) - ANS-The primary accounting standard-setting body in the United States. - duty was delegated by the SEC - issued Statements of Financial Accounting standards and now issues ASU's (updates) codification - ANSan electronic database that integrates and topically organizes U.S. GAAP into one coherent body of literature (shows how to account and measure based on standards) International Accounting Standards Board (IASB) - ANSthe international accounting standard setter, establishing the (IFRS) financial reporting - ANSthe process of communicating financial accounting information about a company to external users Balance sheet - ANS-summarizes a company's financial position at a given date -cornerstone -snapshot of the assets, liabilities, and shareholders' equity on a specific date