MGT 8803 - Financial Accounting
Qualities of Financial Statements - CORRECT ANSWER-Understandability, timeliness,
full disclosure, comparability (over time and with other companies), objectivity (accuracy
not applicable because judgement needed), decision relevance.
Three Required Financial Statements - CORRECT ANSWER-1. Balance Sheet
2. Income Statement
3. Statement of Cash Flows
GAAP - CORRECT ANSWER-Generally Accepted Accounting Principles. The
standards and rules that accountants follow while recording and reporting financial
activities.
SEC - CORRECT ANSWER-Securities and Exchange Commission
FASB - CORRECT ANSWER-Financial Accounting Standards Board, is the private
sector body given the primary responsibility to work out the detailed rules that become
GAAP.
IFRS - CORRECT ANSWER-International Financial Reporting Standards. Opposition
from US companies to convert to this.
GAAP vs. Tax Accounting - CORRECT ANSWER-Tax accounting focuses on IRS
reporting.
Balance Sheet - CORRECT ANSWER-Measures financial position at a point in time.
Includes assets, liabilities, and owner's equity - what company has and what it owes.
Liabilities - CORRECT ANSWER-The creditor's claims to the assets of the business
Assets - CORRECT ANSWER-Resources or rights to receive resources.
Types are physical, intangible, and legal (right to receive).
Owner's Equity - CORRECT ANSWER-The owner's claims to the assets of the
business
Proprietorship - CORRECT ANSWER-A form of business organization with one owner
who takes all the risks and all the profits. Unlimited liability, but the business doesn't pay
taxes.
Partnership - CORRECT ANSWER-A business owned by two or more people who
share its risks and rewards. Unlimited liability, but the business doesn't pay taxes.
Qualities of Financial Statements - CORRECT ANSWER-Understandability, timeliness,
full disclosure, comparability (over time and with other companies), objectivity (accuracy
not applicable because judgement needed), decision relevance.
Three Required Financial Statements - CORRECT ANSWER-1. Balance Sheet
2. Income Statement
3. Statement of Cash Flows
GAAP - CORRECT ANSWER-Generally Accepted Accounting Principles. The
standards and rules that accountants follow while recording and reporting financial
activities.
SEC - CORRECT ANSWER-Securities and Exchange Commission
FASB - CORRECT ANSWER-Financial Accounting Standards Board, is the private
sector body given the primary responsibility to work out the detailed rules that become
GAAP.
IFRS - CORRECT ANSWER-International Financial Reporting Standards. Opposition
from US companies to convert to this.
GAAP vs. Tax Accounting - CORRECT ANSWER-Tax accounting focuses on IRS
reporting.
Balance Sheet - CORRECT ANSWER-Measures financial position at a point in time.
Includes assets, liabilities, and owner's equity - what company has and what it owes.
Liabilities - CORRECT ANSWER-The creditor's claims to the assets of the business
Assets - CORRECT ANSWER-Resources or rights to receive resources.
Types are physical, intangible, and legal (right to receive).
Owner's Equity - CORRECT ANSWER-The owner's claims to the assets of the
business
Proprietorship - CORRECT ANSWER-A form of business organization with one owner
who takes all the risks and all the profits. Unlimited liability, but the business doesn't pay
taxes.
Partnership - CORRECT ANSWER-A business owned by two or more people who
share its risks and rewards. Unlimited liability, but the business doesn't pay taxes.
