C213 WGU Accounting for decision makers Questions & Answers 2024/2025

C213 WGU Accounting for decision makers Questions & Answers 2024/2025 Accounting steps involves -ANSWER 1. Prepare 2. Analyze 3. Gather 4. Make decisions 5. Implement 6. Observe. Inside, Internal - ANSWER-Managerial info is inside or outside the business? True. Financial accounting is only outside. Managerial accounting can be inside AND outside. - ANSWER-True or false, managerial accounting uses BOTH managerial and financial accounting? Outside, External, includes lenders and investors - ANSWER-Financial is inside or outside the business? Balance sheet, income statement, and statement of cash flows - ANSWER-The financial statement includes what 3 documents Balance Sheet - ANSWER-Point in time, Assets (resources) and liabilities (obligations) Income Statement - ANSWER-Period of time (usually 1 year), amount of profit made Statement of Cash flows - ANSWER-Period of time, where money came from, and where it went. Inflow and outflow of cash (Cash Flows). Change in money for the period. Balance sheet equation - ANSWER-Assets= liabilities + equity Revenue equation - ANSWER-Net income=Revenue - Expenses Operating, investing, and financial activities - ANSWER-The statement of cash flows includes what three activities FASB: Financial accounting standards. Private, no government involvement. It is a public process, includes individuals experienced in business and accounting (7 members). - ANSWER-The decision makers in the U.S. (accounting rules) GAAP: General accepted accounting principles - ANSWER-Developed by accounting rule makers. No Legal authority. comparability - ANSWER-We need accounting rules for... SEC: Security and exchange commission. Located in Article 1, Sec 8, Clause 3 - ANSWER-U.S. gov agency responsible for ensuring that investors, creditors, and other financial statement users are provided with reliable information. It watches behavior in financial markets. Registration statements (prospectus), Form 10-K, Form 10-Q, and schedule 14A (proxy statement). These are all publicly viewable. - ANSWER-What forms do the SEC regulate? Oversees stock exchanges, can suspend a company, investigate and suspect violations of the SEC rules. - ANSWER-What does the SEC do? YES. The SEC has legal authority to establish accounting rules and disclosure requirements. - ANSWER-Does the SEC have legal authority? USA congress-SEC-FASB - ANSWER-Financial accounting rule per the US constitution FASB: Financial accounting standards board - ANSWER-The SEC created the GAAP (has no legal authority) - ANSWER-FASB created AIPCA: American INSTITUTE of certified public accountants. - ANSWER-What sets auditory standards, continue education credits, CPA exam, and is the code of professional conduct? Only CPA's: Certified public accountants. - ANSWER-Who is the only person who can sign audit reports? PCAOB: Public company accounting oversight board. - ANSWER-The Sarbanes-Oxley Act "SOX" created? Under supervision of the SEC. - ANSWER-PCAOB is under supervision of? PCAOB: Public Company Accounting OVERSIGHT Board. - ANSWER-Who appoints members, approves actions, gov standards, inspections, and investigations? It is a private group and OVERSEES. AUDITORS? U.S. Gov agency that collects and regulates income taxes. Their primary goal is to collect revenue. - ANSWER-IRS Economic income and accounting income books. & Tax income, and cash flow books. - ANSWER-There are two sets of books. Tax Books and Financial accounting books. Similar to the FASB, but not 100% the same. It is international, everywhere but the U.S. - ANSWER-IASB: International Accounting Standard Board Who enforces and national policies. - ANSWER-Barriers to international convergence are? Condorsement - ANSWER-Rules set centrally, but legally adopted and enforced locally? The SEC, SOX, and PCAOB. - ANSWER-To increase government regulation, one would use: Reduce uncertainty and allows lenders and investors to target their financing and investing to the level of risk they are willing to take. - ANSWER-Financial statements Audit - ANSWER-A financial statement that furthermore decreases uncertainty. Income Statement - ANSWER-Provides accountants the best attempt at measuring the economic performance of a company. Continues...