MGT 8803 - Accounting - Module 1
Actual study with Questions and
correct/verified Answers
What are the three forms of business? - ANSW-Proprietorship, partnership, and corporations
A proprietorship/partnership has limited liability? - ANSW-False
What are the accounting assumptions? - ANSW-Separate entity, consistent unit of measurement
(currency), going concern, periodicity, and materiality
Materiality - ANSW-only information that would influence the decisions of a reliant party need be
disclosed
Periodicity - ANSW-presume arbitrarily picked time period and repeat financial results of that time
Going Concern - ANSW-the presumption that the entity will continue to operate in the future
Who uses financial statements? - ANSW-investors, creditors, financial analysts, gov't agencies
GAAP - ANSW-Generally Accepted Accounting Principles. The standards and rules that accountants
follow while recording and reporting financial activities.
Financial Accounting Standards Board (FASB) - ANSW-the private board that establishes the generally
accepted accounting principles used in the practice of financial accounting
IFRS (International Financial Reporting Standards) - ANSW-A standardized set of rules and practices in
business accounting used in many countries as an alternative to US GAAP.
What are the qualities of financial statements? - ANSW-Understandability, timeliness, full disclosure,
comparability, objectivity, decision relevance
Full Disclosure Principle - ANSW-requires that companies disclose all circumstances and events that
would make a difference to financial statement users
What are the three types of financial statements? (gone over so far) - ANSW-Balance sheet, income
statement, statement of cash flows
Why is accuracy not a quality of a financial statement? - ANSW-Too much judgment is involved
Which quality of financial statements conflicts with objectivity? - ANSW-Decision relevance
What are the three categories of a balance sheet? - ANSW-assets, liabilities, and owner's equity
What is the accounting equation? - ANSW-Assets = Liabilities + Owner's Equity
Accounting equation details - what is the left side? - ANSW-resources available
Accounting equation details - what is the right side? - ANSW-sources of funding provided by
creditors/who has claim to assets
Assets - ANSW-resources owned or rights to receive resources
Actual study with Questions and
correct/verified Answers
What are the three forms of business? - ANSW-Proprietorship, partnership, and corporations
A proprietorship/partnership has limited liability? - ANSW-False
What are the accounting assumptions? - ANSW-Separate entity, consistent unit of measurement
(currency), going concern, periodicity, and materiality
Materiality - ANSW-only information that would influence the decisions of a reliant party need be
disclosed
Periodicity - ANSW-presume arbitrarily picked time period and repeat financial results of that time
Going Concern - ANSW-the presumption that the entity will continue to operate in the future
Who uses financial statements? - ANSW-investors, creditors, financial analysts, gov't agencies
GAAP - ANSW-Generally Accepted Accounting Principles. The standards and rules that accountants
follow while recording and reporting financial activities.
Financial Accounting Standards Board (FASB) - ANSW-the private board that establishes the generally
accepted accounting principles used in the practice of financial accounting
IFRS (International Financial Reporting Standards) - ANSW-A standardized set of rules and practices in
business accounting used in many countries as an alternative to US GAAP.
What are the qualities of financial statements? - ANSW-Understandability, timeliness, full disclosure,
comparability, objectivity, decision relevance
Full Disclosure Principle - ANSW-requires that companies disclose all circumstances and events that
would make a difference to financial statement users
What are the three types of financial statements? (gone over so far) - ANSW-Balance sheet, income
statement, statement of cash flows
Why is accuracy not a quality of a financial statement? - ANSW-Too much judgment is involved
Which quality of financial statements conflicts with objectivity? - ANSW-Decision relevance
What are the three categories of a balance sheet? - ANSW-assets, liabilities, and owner's equity
What is the accounting equation? - ANSW-Assets = Liabilities + Owner's Equity
Accounting equation details - what is the left side? - ANSW-resources available
Accounting equation details - what is the right side? - ANSW-sources of funding provided by
creditors/who has claim to assets
Assets - ANSW-resources owned or rights to receive resources
