Chapters 1 and 2: Study Guide Material Flashcards Preview

Accounting 207 > Chapters 1 and 2: Study Guide Material > Flashcards

Flashcards in Chapters 1 and 2: Study Guide Material Deck (41):
1

What are the three types of business formations?

-sole proprietorship
-partnership
-corporation

2

Who are the uses of a businesses information?

-owners
-creditors

3

Assets=?

liabilities + stockholder equity

4

What are the two major sources of stockholders' equity?

-common stock
-retained earnings

5

Net Income=?

revenues-expenses

6

The balance sheet covers....

all the events/transactions that have affected each of the categories since the inception of the business

7

Operating activities

-involves cash and other accounts typically relates to net income and changes in current assets and current liabilities

8

Investing Activities

relate to changes in long-term assets

-buy or sell long term assets
-lend money or collecting money back

9

Financing Activities

-relate to dealings with long term creditors and owners


-borrowing or paying back principal
-owners invest in business or distributions to owners

10

Income statement shows what

expenses incurred

11

Statement of Cash Flows shows what

expenses paid

12

Balance sheet shows

expenses still owed

13

who is GAAP developed by?

FASB(financial accounting standards board)

14

who does the FASB get its power from?

the SEC( securities and exchange commission)

15

CPA code of conduct

-integrity
-objectivity
independence
-due care

16

the audit is signed on what basis?

-presents fairly(due to estimates)
-in all material respects
-in conformity with GAAP
-CPA must provide assurance as to the effectiveness of the internal controls of the business

17

Four World Wide CPA firms

-kpmg
-deloitte
-Pricewaterhouse Coopers
-Ernest and young

18

2nd tier firms

-Protiviti
-Grant thornton
-BDO

19

Regional firms

Parente Beard

20

Management discussion and analysis

is a required section of the annual report
it highlights trends,significant events and uncertainties regarding its operations, investing and financing activities

21

Two points on Assets

-they will provide future benefits to the owner
-they are recorded at original cost less adjustments

22

Statement of cash flows only records revenues....

when cash is received regardless of when the service is performed

23

What does the balance sheet not show? but what does it show

- the worth of the business


-the assets at cost

- the financing/funding behind those assets

24

True or False: Revenues can come before,after, or during the transaction?

True

25

Net Income on the Income Statement Does Not Equal

Cash,Change in Cash, Cash From Operating Activities or Retained Earnings

26

Who has primary responsibility for the accuracy of the financial statements?

-managers

27

What happens when fraudulent statements are presented?

-jail time for executives

28

What is the MD&A?

management discussion and analysis section
- it is a part of financial report
-highlights trends, significant events, and uncertainties regarding its operations, investing, and financing activities

29

What is the primary goal of FASB?

to collect all authoritative literature related to a particular topic in one place

30

What is the CRS?

Codification Research System which is an on-line, real-time data base that provides easy access to the Codification

31

How many countries permit the IFRS?

115 countries

32

Why is the implementation of a world-wide accounting system difficult?

-different users need

33

Principles vs Rules: GAAP vs IFRS

IFRS is based on principles

GAAP is more detail oriented and considered rules-based

34

What term does the IFRS use for balance sheet?

Statement of Financial Position

35

What makes the government and charitable organizations?

-they have no profit motive

-big difference is there is no stockholders' equity section

36

Besides borrowing money what else can a corporation do to get money?

-issuing bonds

37

Who are the other external users of information?

-Internal Revenue Service and Securities Exchange Commission

-management and employees

38

Impediments for IFRS

-where is the funding and authority for IASB
-Sarbane Oxley Act of 2002

39

What do both systems use fair value or historical cost?

fair value

40

Statement of Cash Flows Points

-cash receipts(inflows) minus cash disbursements(outflows)

-organized according to business activity category

-balance and income statement provide insight in these activities

41

What does the balance sheet show in relation to assets?

-statement from handout about beginning...


-the assets at cost and the financing/funding behind those assets