D774 - Key Concepts Questions with 100%
Correct Answers
Ancient civilization associated with early accounting
Ancient Egypt (c. 3100-30 BCE)
Year of significant stock market crash
1929
Regulatory outcome of accounting scandals
The Sarbanes-Oxley Act was introduced, requiring stricter financial controls and oversight.
Difference between financial and managerial accounting
Financial accounting focuses on external reporting, while managerial accounting focuses on
internal decision-making.
Focus of managerial accounting
Improving future results based on an analysis of past performance.
Characteristic of financial accounting reports
They include monetary and nonmonetary information.
Federal agency overseeing securities markets
Securities and Exchange Commission (SEC)
Organization setting accounting standards in the U.S.
Financial Accounting Standards Board (FASB)
Purpose of the Public Company Accounting Oversight Board (PCAOB)
, It oversees the audits of public companies to protect investors.
Suitable audit firm for multinational corporations
Big Four
Accounting formula represented by the income statement
Not provided in the notes.
Beginning retained earnings + net income - dividends
Formula for calculating retained earnings.
Current assets - current liabilities
Formula for calculating working capital.
Revenues - expenses
Formula for calculating net income.
Operating expense on the income statement
The day-to-day operational costs not associated with the direct selling of products or services.
Rent for office space
Reported as general and administrative expenses on the income statement.
Accrual basis of accounting
The income statement reports profit or loss using this method.
Income statement categories
They categorize revenue based on operating and non-operating activities.
$500 from selling products
Correct Answers
Ancient civilization associated with early accounting
Ancient Egypt (c. 3100-30 BCE)
Year of significant stock market crash
1929
Regulatory outcome of accounting scandals
The Sarbanes-Oxley Act was introduced, requiring stricter financial controls and oversight.
Difference between financial and managerial accounting
Financial accounting focuses on external reporting, while managerial accounting focuses on
internal decision-making.
Focus of managerial accounting
Improving future results based on an analysis of past performance.
Characteristic of financial accounting reports
They include monetary and nonmonetary information.
Federal agency overseeing securities markets
Securities and Exchange Commission (SEC)
Organization setting accounting standards in the U.S.
Financial Accounting Standards Board (FASB)
Purpose of the Public Company Accounting Oversight Board (PCAOB)
, It oversees the audits of public companies to protect investors.
Suitable audit firm for multinational corporations
Big Four
Accounting formula represented by the income statement
Not provided in the notes.
Beginning retained earnings + net income - dividends
Formula for calculating retained earnings.
Current assets - current liabilities
Formula for calculating working capital.
Revenues - expenses
Formula for calculating net income.
Operating expense on the income statement
The day-to-day operational costs not associated with the direct selling of products or services.
Rent for office space
Reported as general and administrative expenses on the income statement.
Accrual basis of accounting
The income statement reports profit or loss using this method.
Income statement categories
They categorize revenue based on operating and non-operating activities.
$500 from selling products
