Int. ACCT 1 - UARK - Rowe Exam With Complete Solutions!!
Who is the primary user of financial accounting information? - ANSWER>>External
Parties (investors & creditors)
What are the problems that financial accounting seeks to solve? - ANSWER>>It
reduces information asymmetry (parties have differing info) and the problem of adverse
selection
Which entities currently establish U.S. accounting standards? - ANSWER>>FASB
Which entities have enforcement authority of accounting standards for public
companies? - ANSWER>>SEC
What is GAAP? - ANSWER>>Generally Accepted Accounting Principles
Why do we need a conceptual framework in accounting? - ANSWER>>Develops a
coherent set of standards and rules and solves new and emerging practical problems.
What makes accounting information useful? - ANSWER>>Relevance and Faithful
representation
What is the conceptual framework for financial reporting and how do the items in the
framework relate to GAAP (particularly the GAAP that we have learned)? -
ANSWER>>1. Identify boundaries of reporting
2. Select transactions
3. How recognized & measured
4. How summarized & reported
, "Moment in time" - ANSWER>>Assets, liabilities
"period of time" - ANSWER>>investment by owner, distribution to owners,
comprehensive income, revenue, expenses, gains, and losses.
What are the qualitative characteristics that make financial information useful, how do
these apply to areas we have learned? - ANSWER>>Relevance:
- (predictive value, confirmatory value, and materiality)
Faithful Representation:
- (completeness, neutrality, and free from error)
What is the normal account balance (debit or credit) for common accounts? -
ANSWER>>Assets- Debit
Liabilities- Credit
SHE- Credit
What are the primary purposes of adjusting entries? - ANSWER>>- Recording internal
transactions
- Accruals: - Accrued revenue/accrued expenses
Deferrals - ANSWER>>cash before recognition
Prepaid expenses
Unearned Revenue
Accrual - ANSWER>>recognition before cash
Accrued Revenue
Accrued expenses
ex. utilities, billed services
Who is the primary user of financial accounting information? - ANSWER>>External
Parties (investors & creditors)
What are the problems that financial accounting seeks to solve? - ANSWER>>It
reduces information asymmetry (parties have differing info) and the problem of adverse
selection
Which entities currently establish U.S. accounting standards? - ANSWER>>FASB
Which entities have enforcement authority of accounting standards for public
companies? - ANSWER>>SEC
What is GAAP? - ANSWER>>Generally Accepted Accounting Principles
Why do we need a conceptual framework in accounting? - ANSWER>>Develops a
coherent set of standards and rules and solves new and emerging practical problems.
What makes accounting information useful? - ANSWER>>Relevance and Faithful
representation
What is the conceptual framework for financial reporting and how do the items in the
framework relate to GAAP (particularly the GAAP that we have learned)? -
ANSWER>>1. Identify boundaries of reporting
2. Select transactions
3. How recognized & measured
4. How summarized & reported
, "Moment in time" - ANSWER>>Assets, liabilities
"period of time" - ANSWER>>investment by owner, distribution to owners,
comprehensive income, revenue, expenses, gains, and losses.
What are the qualitative characteristics that make financial information useful, how do
these apply to areas we have learned? - ANSWER>>Relevance:
- (predictive value, confirmatory value, and materiality)
Faithful Representation:
- (completeness, neutrality, and free from error)
What is the normal account balance (debit or credit) for common accounts? -
ANSWER>>Assets- Debit
Liabilities- Credit
SHE- Credit
What are the primary purposes of adjusting entries? - ANSWER>>- Recording internal
transactions
- Accruals: - Accrued revenue/accrued expenses
Deferrals - ANSWER>>cash before recognition
Prepaid expenses
Unearned Revenue
Accrual - ANSWER>>recognition before cash
Accrued Revenue
Accrued expenses
ex. utilities, billed services
