(ACCT 5110) Intermediate Accounting
Exam 1 Study Set Questions And Actual
Answers.
Role of Accounting - Answer Identify, record, measure, and report financial information that is relevant
and faithfully represents companies to present and future stakeholders
Types of Business Activities - Answer - Financing: raising capital
- Investing: spending capital on resources
- Operating: using resources for daily activities
Types of stakeholders - Answer - Common Equity shareholders
- Banks
- Creditors
- Managers/Employees
- Suppliers
- Labor unions/pension funds
- Customers
- Government authorities
- Local communities
Ownership vs. Control - Answer - Ownership refers to those who supply and own resources
(shareholders, creditors)
- Control refers to those who manage and use resources (Executives, Managers, Employees)
Two main sources that determine accounting reports - Answer 1) Authoritative professional accounting
standards (GAAP & IFRS)
2) Choices, methods, estimates, and judgements on how to apply standards
, Financial Accounting Standards Board (FASB) - Answer - Issued Statements of Financial Accounting
Standards (SFAs) in 2009
- Currently issues Accounting Standards Updates (ASUs)
*Know that ASUs are how they make changes to SFAs*
Securities Exchange Commission (SEC) - Answer Delegates legal authority to set GAAP to FASB, as well
as legal authority to set IFRS to IASB
International Accounting Standards Board (IASB) - Answer Set accounting standards internationally
(International Financial Reporting Standards - IFRS)
*IFRS is required or permitted in roughly 140 countries*
Financial Reporting - Answer the process of communicating financial accounting information about a
company to external users
Aspects of financial reporting - Answer - Balance Sheet: company's financial position @ a given date
- Income Statement: summary of company's income
- Statement of Cash Flow: summary of cash inflows/outflows
- Statement of Changes in Stockholder's Equity: summary of changes in each item of equity
Notes to the financial statements - Answer Clarify the financial statements and provide additional
detail
Management discussion & analysis (MD&A) - Answer Provides narrative explanation for reports
Managers' & Independent Auditors' Attestations - Answer Management is responsible for financial
statements and underlying accounting and control system
Chapter 2: Accounting Principles & Concepts - Answer
Exam 1 Study Set Questions And Actual
Answers.
Role of Accounting - Answer Identify, record, measure, and report financial information that is relevant
and faithfully represents companies to present and future stakeholders
Types of Business Activities - Answer - Financing: raising capital
- Investing: spending capital on resources
- Operating: using resources for daily activities
Types of stakeholders - Answer - Common Equity shareholders
- Banks
- Creditors
- Managers/Employees
- Suppliers
- Labor unions/pension funds
- Customers
- Government authorities
- Local communities
Ownership vs. Control - Answer - Ownership refers to those who supply and own resources
(shareholders, creditors)
- Control refers to those who manage and use resources (Executives, Managers, Employees)
Two main sources that determine accounting reports - Answer 1) Authoritative professional accounting
standards (GAAP & IFRS)
2) Choices, methods, estimates, and judgements on how to apply standards
, Financial Accounting Standards Board (FASB) - Answer - Issued Statements of Financial Accounting
Standards (SFAs) in 2009
- Currently issues Accounting Standards Updates (ASUs)
*Know that ASUs are how they make changes to SFAs*
Securities Exchange Commission (SEC) - Answer Delegates legal authority to set GAAP to FASB, as well
as legal authority to set IFRS to IASB
International Accounting Standards Board (IASB) - Answer Set accounting standards internationally
(International Financial Reporting Standards - IFRS)
*IFRS is required or permitted in roughly 140 countries*
Financial Reporting - Answer the process of communicating financial accounting information about a
company to external users
Aspects of financial reporting - Answer - Balance Sheet: company's financial position @ a given date
- Income Statement: summary of company's income
- Statement of Cash Flow: summary of cash inflows/outflows
- Statement of Changes in Stockholder's Equity: summary of changes in each item of equity
Notes to the financial statements - Answer Clarify the financial statements and provide additional
detail
Management discussion & analysis (MD&A) - Answer Provides narrative explanation for reports
Managers' & Independent Auditors' Attestations - Answer Management is responsible for financial
statements and underlying accounting and control system
Chapter 2: Accounting Principles & Concepts - Answer
