ACCY 201 - test 1 - Ole Miss - Burney Questions
and Verified Answers
accounting Correct Answer: an information and measurement system that identifies, records, and
communicates relevant, reliable, and comparable information about an organization's business activities.
financial accounting Correct Answer: the area of accounting aimed at serving external users by providing
them with general-purpose financial statements.
managerial accounting Correct Answer: the area of accounting that serves the decision-making needs of
internal users.
fraud triangle Correct Answer: opportunity
pressure
rationalization
generally accepted accounting principles (GAAP) Correct Answer: a framework of accounting standards,
rules and procedures defined by the professional accounting industry, which has been adopted by nearly
all publicly traded U.S. companies.
securities and exchange commission (SEC) Correct Answer: a government agency that has the legal
authority to set GAAP and also oversees proper use of GAAP by companies hat raise money from the
public through issuances of their stock and debt.
financial accounting standards board (FASB) Correct Answer: private-sector group that sets both broad
and specific principles. setting U.S. GAAP is delegated to this group.
international accounting standards board (IASB) Correct Answer: an independent group consisting of
individuals from many countries that issues international financial reporting standards.
international financial reporting standards (IFRS) Correct Answer: standards that identify preferred
accounting practices.
general accounting principles Correct Answer: the basic assumptions, concepts, and guidelines for
preparing financial statements.
cost principle Correct Answer: prescribes that accounting information is based on actual cost (with a
potential for subsequent adjustments to market).
, revenue recognition principle Correct Answer: provides guidance on when a company must recognize
revenue.
matching principle Correct Answer: prescribes that a company record the expenses it incurred to
generate the revenue reported.
full disclosure principle Correct Answer: prescribes that a company report the details behind financial
statements that would impact users' decisions.
going-concern assumption Correct Answer: the accounting information reflects a presumption that the
business will continue operating instead of being closed or sold.
monetary unit assumption Correct Answer: transactions and events can be expressed in monetary, or
money, units.
time period assumption Correct Answer: assumption that presumes that the life of a company can be
divided into time periods, such as months and years, and that useful reports can be prepared for those
periods.
business entity assumption Correct Answer: this assumption means that a business is accounted for
separately from other business entities, including its owner.
Sarbanes-Oxley Act (SOX) Correct Answer: act to help curb financial abuses at companies that issue their
stock to the public.
Dodd-Frank Wall Street Reform and Consumer Protection Act Correct Answer: act to promote
accountability and transparency in the financial system, put an end to the notion of "too big to fail,"
protect the taxpayer by ending bailouts, and protect consumers from abusive financial services.
assets Correct Answer: resources a company owns or controls that are expected to yield future benefits.
liabilities Correct Answer: creditors' claims on assets that reflect company obligations to provide assets,
products, or services to others.
equity Correct Answer: the owner's claim on assets, and is equal to assets minus liabilities.
dividends Correct Answer: the outflow of resources such as cash and other assets to stockholders. reduces
owners equity.
revenues Correct Answer: increase equity (via net income) from sales of products and services to
customers.
and Verified Answers
accounting Correct Answer: an information and measurement system that identifies, records, and
communicates relevant, reliable, and comparable information about an organization's business activities.
financial accounting Correct Answer: the area of accounting aimed at serving external users by providing
them with general-purpose financial statements.
managerial accounting Correct Answer: the area of accounting that serves the decision-making needs of
internal users.
fraud triangle Correct Answer: opportunity
pressure
rationalization
generally accepted accounting principles (GAAP) Correct Answer: a framework of accounting standards,
rules and procedures defined by the professional accounting industry, which has been adopted by nearly
all publicly traded U.S. companies.
securities and exchange commission (SEC) Correct Answer: a government agency that has the legal
authority to set GAAP and also oversees proper use of GAAP by companies hat raise money from the
public through issuances of their stock and debt.
financial accounting standards board (FASB) Correct Answer: private-sector group that sets both broad
and specific principles. setting U.S. GAAP is delegated to this group.
international accounting standards board (IASB) Correct Answer: an independent group consisting of
individuals from many countries that issues international financial reporting standards.
international financial reporting standards (IFRS) Correct Answer: standards that identify preferred
accounting practices.
general accounting principles Correct Answer: the basic assumptions, concepts, and guidelines for
preparing financial statements.
cost principle Correct Answer: prescribes that accounting information is based on actual cost (with a
potential for subsequent adjustments to market).
, revenue recognition principle Correct Answer: provides guidance on when a company must recognize
revenue.
matching principle Correct Answer: prescribes that a company record the expenses it incurred to
generate the revenue reported.
full disclosure principle Correct Answer: prescribes that a company report the details behind financial
statements that would impact users' decisions.
going-concern assumption Correct Answer: the accounting information reflects a presumption that the
business will continue operating instead of being closed or sold.
monetary unit assumption Correct Answer: transactions and events can be expressed in monetary, or
money, units.
time period assumption Correct Answer: assumption that presumes that the life of a company can be
divided into time periods, such as months and years, and that useful reports can be prepared for those
periods.
business entity assumption Correct Answer: this assumption means that a business is accounted for
separately from other business entities, including its owner.
Sarbanes-Oxley Act (SOX) Correct Answer: act to help curb financial abuses at companies that issue their
stock to the public.
Dodd-Frank Wall Street Reform and Consumer Protection Act Correct Answer: act to promote
accountability and transparency in the financial system, put an end to the notion of "too big to fail,"
protect the taxpayer by ending bailouts, and protect consumers from abusive financial services.
assets Correct Answer: resources a company owns or controls that are expected to yield future benefits.
liabilities Correct Answer: creditors' claims on assets that reflect company obligations to provide assets,
products, or services to others.
equity Correct Answer: the owner's claim on assets, and is equal to assets minus liabilities.
dividends Correct Answer: the outflow of resources such as cash and other assets to stockholders. reduces
owners equity.
revenues Correct Answer: increase equity (via net income) from sales of products and services to
customers.
