ACCT 2000 LSU Exam Prep (Verified Q’s & Answers)
Verifiability - ✔✔Info that can be proved that it's free from error
Timeliness - ✔✔Info that is available to decision makers before it loses capacity to
influence decision makers
Understandability - ✔✔Info has this quality if it is presented in a clear and concise fashion
Monetary unit assumption - ✔✔Requires that only things that can be expressed in
money are included in acct records
Economic entity assumption - ✔✔Every economic entity can be separately identified
and accounted for
Periodicity assumption - ✔✔States that the life of a business can be divided into
time periods
Going concern assumption - ✔✔The business will remain in operation for foreseeable future
Accrual accounting - ✔✔Transactions that change a company's financial statements
are recorded in the periods in which the events occur
Cost principle - ✔✔Dictates companies record assets at their cost.
, Fair value principle - ✔✔If the value starts changing, you would change the value on
balance sheet
Accounting - ✔✔The info system that identifies, records, and communicates the
economic events of an organization to interested users
Internal users (inside the company) - ✔✔Managers, supervisors, CEO, CFO, board members
External (outside the company) - ✔✔Investors, stockholders, creditors, banks
Effective financial reporting depends on - ✔✔ethical behavior
Sarbanes-Oxley Act in 2002 (after Enron) - ✔✔CEO/CFO must verify on reports,
severe penalties for fraud, increased auditor duties
Financing activities - ✔✔Borrow money (liabilities, notes payable, bonds payable),
issue shares of stock (dividends)
Investing activities - ✔✔Purchase of resources a company needs in order to operate.
Operating activities - ✔✔Revenue, inventory, acct receivable m, expenses, net income,
net loss, cost of goods sold
4 financial statements - ✔✔Income, retained earnings, balance sheet, cash flows
Income statement - ✔✔Records decency and expenses (month, quarter, year)
Retained earnings statement - ✔✔Beginning of r/e +net income -dividends. Covers time
span
Verifiability - ✔✔Info that can be proved that it's free from error
Timeliness - ✔✔Info that is available to decision makers before it loses capacity to
influence decision makers
Understandability - ✔✔Info has this quality if it is presented in a clear and concise fashion
Monetary unit assumption - ✔✔Requires that only things that can be expressed in
money are included in acct records
Economic entity assumption - ✔✔Every economic entity can be separately identified
and accounted for
Periodicity assumption - ✔✔States that the life of a business can be divided into
time periods
Going concern assumption - ✔✔The business will remain in operation for foreseeable future
Accrual accounting - ✔✔Transactions that change a company's financial statements
are recorded in the periods in which the events occur
Cost principle - ✔✔Dictates companies record assets at their cost.
, Fair value principle - ✔✔If the value starts changing, you would change the value on
balance sheet
Accounting - ✔✔The info system that identifies, records, and communicates the
economic events of an organization to interested users
Internal users (inside the company) - ✔✔Managers, supervisors, CEO, CFO, board members
External (outside the company) - ✔✔Investors, stockholders, creditors, banks
Effective financial reporting depends on - ✔✔ethical behavior
Sarbanes-Oxley Act in 2002 (after Enron) - ✔✔CEO/CFO must verify on reports,
severe penalties for fraud, increased auditor duties
Financing activities - ✔✔Borrow money (liabilities, notes payable, bonds payable),
issue shares of stock (dividends)
Investing activities - ✔✔Purchase of resources a company needs in order to operate.
Operating activities - ✔✔Revenue, inventory, acct receivable m, expenses, net income,
net loss, cost of goods sold
4 financial statements - ✔✔Income, retained earnings, balance sheet, cash flows
Income statement - ✔✔Records decency and expenses (month, quarter, year)
Retained earnings statement - ✔✔Beginning of r/e +net income -dividends. Covers time
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