ACG 5026 FSU EXAM 1 QUESTION AND ANSWERS
Provides an opinion on the fair presentation of a companys financial reporting - Answers
- Auditor
Currently codifies new accounting standards that guide financial report - Answers -
FASB
Set of authoritative standards and accepted practices that guide the preparation of
financial statements in the US - Answers - GAAP
Helps ensure the accuracy of a company's financial reporting through a system of
internal monitoring procedures and rules - Answers - Internal Controls
Organization that has the ultimate authority over financial reporting - Answers - SEC
Approves auditing standards and monitors audit of public companies that are required
to report annual results - Answers - PCAOB
Takes responsibility for the accuracy and completeness of information disclosed in the
financial statements - Answers - Management
Income statement flow - Answers - Sales revenue - cost of goods sold
= Gross profit - other expenses
= Net income (or loss)
Statement of cash flow - Answers - Cash flow of operations
+ cash flow of investing
+ cash flow of financing
+ effect of exchange in rates
= Net increase or decrease in cash
+ cash in beginning of year
= cash at end of year
Whether or not a particular amount is large enough to affect a decision - Answers -
Materiality
Presented so knowledgeable reader can understand how it relates to the decision
process - Answers - Understandability
ability to make a difference in decision and influence the decisions - Answers -
Relevance
Financial reporting information must be available to decision - Answers - Timeliness
Provides an opinion on the fair presentation of a companys financial reporting - Answers
- Auditor
Currently codifies new accounting standards that guide financial report - Answers -
FASB
Set of authoritative standards and accepted practices that guide the preparation of
financial statements in the US - Answers - GAAP
Helps ensure the accuracy of a company's financial reporting through a system of
internal monitoring procedures and rules - Answers - Internal Controls
Organization that has the ultimate authority over financial reporting - Answers - SEC
Approves auditing standards and monitors audit of public companies that are required
to report annual results - Answers - PCAOB
Takes responsibility for the accuracy and completeness of information disclosed in the
financial statements - Answers - Management
Income statement flow - Answers - Sales revenue - cost of goods sold
= Gross profit - other expenses
= Net income (or loss)
Statement of cash flow - Answers - Cash flow of operations
+ cash flow of investing
+ cash flow of financing
+ effect of exchange in rates
= Net increase or decrease in cash
+ cash in beginning of year
= cash at end of year
Whether or not a particular amount is large enough to affect a decision - Answers -
Materiality
Presented so knowledgeable reader can understand how it relates to the decision
process - Answers - Understandability
ability to make a difference in decision and influence the decisions - Answers -
Relevance
Financial reporting information must be available to decision - Answers - Timeliness
