5/7/25, 12:58 WGU MBA First Half of Exams Flashcards |
PM Quizlet
American Institute of Certified Public the professional organization of certified public accountants (CPAs) in the United
Accountants (AICPA) States
the organization that inspects the audit practices of registered audit firms and
Public Company Accounting Oversight
has statutory authority to investigate questionable audit practices and to
Board (PCAOB)
impose sanctions such as barring an audit firm from auditing SEC-registered
companies
Gov't agency that establishes rules to define exactly when income should be taxed.
Internal Revenue Service (IRS) It has no role in setting financial accounting rules; and a company's financial
statements are not used in determining how much tax the company must pay
Organization that was formed to develop a common set of worldwide
The International Accounting Standards
accounting standards. Its standards are increasingly accepted worldwide, but FASB
Board (IASB)
rules are still the standard in the United States.
1. Rapid Advancements in the IT field Which 3 factors have combined to make right now a time of significant change
2. the international integration of in accounting?
worldwide business
3.Increased scrutiny associated with
large corporate accounting scandals
A wave of accounting scandals starting in 2001 resulted in this act, which increases
Sarbanes-Oxley Act
U.S. federal government scrutiny of the production of financial statements.
reports a company's financial position at a specified point in time and lists the
Balance Sheet company's resources (assets), obligations (liabilities), and net ownership interest
(owners' equity).
probable future economic benefits obtained or controlled by a company as a result
Assets
of past transactions or events
probable future sacrifices of economic benefits arising from present obligations of a
Liabilities company to transfer assets or provide services in the future as a result of past
transactions or events
the residual interest in the assets of a company that remains after deducting its
Owners' equity
liabilities
Assets = Liabilities + Owners' Equity What is the accounting equation?
By order of liquidity In what order are assets typically listed on the balance sheet?
Current and Long-term Liabilities are divided into which 2 categories on the balance sheet?
states that the financial results of an What is the entity concept?
economic entity should be reported
separately from the financial results of
other entities, even though all those entities
may be controlled by the same person
(revenues-expense= net income) Equation to calculate net income
When work has been done and According to accounting rules, when should revenue be recognized?
collectability of cash can be reasonably
assured
Operating activities those activities that comprise the day-to-day operations of a business.
The purchase and sale of long-term assets such as land and equipment are
Investing activities
known as____.
those activities through which cash is obtained from, or repaid to, creditors
Financing activities
and investors
https://quizlet.com/140849051/w gu-mba-first-half-of-exams- 1/
flash-cards/ 6
, 5/7/25, 12:58 WGU MBA First Half of Exams Flashcards |
PM Quizlet
information on the accounting assumptions What information do the notes to accounting statements provide?
used in preparing the statements and
supplemental information not included in
the statements themselves
1. Summary of accounting policy What are the 4 general types of accounting notes?
2. Additional info about summary
totals
3.Disclosure of info not included in
summary
4. Supplemental disclosure required by
FASB or SEC
Conservatism the practice of recognizing all losses but not recognizing gains until they are certain
the concept that weighs whether a certain dollar amount is large enough to make a
Materiality
difference to anyone
Articulation the idea that the three primary financial statements are interrelated
Debt Ratio Percentage of funds needed to purchase assets that were obtained through
borrowing
Total Liabilities/
Total Assets
Current Ratio Measure of liquidity; number of times current assets could cover current liabilities
Current Assets/
Current Liabilities
Return on Sales Ratio Number of pennies earned during the year on each dollar of sales
Net Income/
Sales
Asset Turnover Number of dollars of sales during the year generated by each dollar of assets
Sales/
Total
Assets
Return on Equity Number of pennies earned during the year on each dollar invested
Net Income/
Stockholder's Equity
Price-earnings Ratio Amount investors are willing to pay for each dollar of earnings; indication of growth
potential
Market Value of Shares/
Net Income
1) to predict a company's future What are the two main purposes of financial statement analysis?
profitability and cash flows
2)to identify and improve
potential problem areas
relationships between two financial statement numbers and are often used in
financial ratios
analyzing and describing a company's performance
financial docs that allow comparison of Common-size financial statements
financial statements across years and
between companies and are prepared by
dividing all financial statement numbers by
sales for the year
https://quizlet.com/140849051/w gu-mba-first-half-of-exams- 2/
flash-cards/ 6
PM Quizlet
American Institute of Certified Public the professional organization of certified public accountants (CPAs) in the United
Accountants (AICPA) States
the organization that inspects the audit practices of registered audit firms and
Public Company Accounting Oversight
has statutory authority to investigate questionable audit practices and to
Board (PCAOB)
impose sanctions such as barring an audit firm from auditing SEC-registered
companies
Gov't agency that establishes rules to define exactly when income should be taxed.
Internal Revenue Service (IRS) It has no role in setting financial accounting rules; and a company's financial
statements are not used in determining how much tax the company must pay
Organization that was formed to develop a common set of worldwide
The International Accounting Standards
accounting standards. Its standards are increasingly accepted worldwide, but FASB
Board (IASB)
rules are still the standard in the United States.
1. Rapid Advancements in the IT field Which 3 factors have combined to make right now a time of significant change
2. the international integration of in accounting?
worldwide business
3.Increased scrutiny associated with
large corporate accounting scandals
A wave of accounting scandals starting in 2001 resulted in this act, which increases
Sarbanes-Oxley Act
U.S. federal government scrutiny of the production of financial statements.
reports a company's financial position at a specified point in time and lists the
Balance Sheet company's resources (assets), obligations (liabilities), and net ownership interest
(owners' equity).
probable future economic benefits obtained or controlled by a company as a result
Assets
of past transactions or events
probable future sacrifices of economic benefits arising from present obligations of a
Liabilities company to transfer assets or provide services in the future as a result of past
transactions or events
the residual interest in the assets of a company that remains after deducting its
Owners' equity
liabilities
Assets = Liabilities + Owners' Equity What is the accounting equation?
By order of liquidity In what order are assets typically listed on the balance sheet?
Current and Long-term Liabilities are divided into which 2 categories on the balance sheet?
states that the financial results of an What is the entity concept?
economic entity should be reported
separately from the financial results of
other entities, even though all those entities
may be controlled by the same person
(revenues-expense= net income) Equation to calculate net income
When work has been done and According to accounting rules, when should revenue be recognized?
collectability of cash can be reasonably
assured
Operating activities those activities that comprise the day-to-day operations of a business.
The purchase and sale of long-term assets such as land and equipment are
Investing activities
known as____.
those activities through which cash is obtained from, or repaid to, creditors
Financing activities
and investors
https://quizlet.com/140849051/w gu-mba-first-half-of-exams- 1/
flash-cards/ 6
, 5/7/25, 12:58 WGU MBA First Half of Exams Flashcards |
PM Quizlet
information on the accounting assumptions What information do the notes to accounting statements provide?
used in preparing the statements and
supplemental information not included in
the statements themselves
1. Summary of accounting policy What are the 4 general types of accounting notes?
2. Additional info about summary
totals
3.Disclosure of info not included in
summary
4. Supplemental disclosure required by
FASB or SEC
Conservatism the practice of recognizing all losses but not recognizing gains until they are certain
the concept that weighs whether a certain dollar amount is large enough to make a
Materiality
difference to anyone
Articulation the idea that the three primary financial statements are interrelated
Debt Ratio Percentage of funds needed to purchase assets that were obtained through
borrowing
Total Liabilities/
Total Assets
Current Ratio Measure of liquidity; number of times current assets could cover current liabilities
Current Assets/
Current Liabilities
Return on Sales Ratio Number of pennies earned during the year on each dollar of sales
Net Income/
Sales
Asset Turnover Number of dollars of sales during the year generated by each dollar of assets
Sales/
Total
Assets
Return on Equity Number of pennies earned during the year on each dollar invested
Net Income/
Stockholder's Equity
Price-earnings Ratio Amount investors are willing to pay for each dollar of earnings; indication of growth
potential
Market Value of Shares/
Net Income
1) to predict a company's future What are the two main purposes of financial statement analysis?
profitability and cash flows
2)to identify and improve
potential problem areas
relationships between two financial statement numbers and are often used in
financial ratios
analyzing and describing a company's performance
financial docs that allow comparison of Common-size financial statements
financial statements across years and
between companies and are prepared by
dividing all financial statement numbers by
sales for the year
https://quizlet.com/140849051/w gu-mba-first-half-of-exams- 2/
flash-cards/ 6
