ACCY 201 - test 1 - Ole Miss – Burney
Questions and Correct Answers.
accounting - Answer an information and measurement system that identifies, records, and
communicates relevant, reliable, and comparable information about an organization's business
activities.
financial accounting - Answer the area of accounting aimed at serving external users by
providing them with general-purpose financial statements.
managerial accounting - Answer the area of accounting that serves the decision-making
needs of internal users.
fraud triangle - Answer opportunity
pressure
rationalization
generally accepted accounting principles (GAAP) - 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) - 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) - 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) - Answer an independent group consisting
of individuals from many countries that issues international financial reporting standards.
international financial reporting standards (IFRS) - Answer standards that identify preferred
accounting practices.
general accounting principles - Answer the basic assumptions, concepts, and guidelines for
preparing financial statements.
cost principle - Answer prescribes that accounting information is based on actual cost (with a
potential for subsequent adjustments to market).
, revenue recognition principle - Answer provides guidance on when a company must
recognize revenue.
matching principle - Answer prescribes that a company record the expenses it incurred to
generate the revenue reported.
full disclosure principle - Answer prescribes that a company report the details behind
financial statements that would impact users' decisions.
going-concern assumption - Answer the accounting information reflects a presumption that
the business will continue operating instead of being closed or sold.
monetary unit assumption - Answer transactions and events can be expressed in monetary,
or money, units.
time period assumption - 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 - Answer this assumption means that a business is accounted for
separately from other business entities, including its owner.
Sarbanes-Oxley Act (SOX) - 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 - 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 - Answer resources a company owns or controls that are expected to yield future
benefits.
liabilities - Answer creditors' claims on assets that reflect company obligations to provide
assets, products, or services to others.
equity - Answer the owner's claim on assets, and is equal to assets minus liabilities.
Questions and Correct Answers.
accounting - Answer an information and measurement system that identifies, records, and
communicates relevant, reliable, and comparable information about an organization's business
activities.
financial accounting - Answer the area of accounting aimed at serving external users by
providing them with general-purpose financial statements.
managerial accounting - Answer the area of accounting that serves the decision-making
needs of internal users.
fraud triangle - Answer opportunity
pressure
rationalization
generally accepted accounting principles (GAAP) - 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) - 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) - 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) - Answer an independent group consisting
of individuals from many countries that issues international financial reporting standards.
international financial reporting standards (IFRS) - Answer standards that identify preferred
accounting practices.
general accounting principles - Answer the basic assumptions, concepts, and guidelines for
preparing financial statements.
cost principle - Answer prescribes that accounting information is based on actual cost (with a
potential for subsequent adjustments to market).
, revenue recognition principle - Answer provides guidance on when a company must
recognize revenue.
matching principle - Answer prescribes that a company record the expenses it incurred to
generate the revenue reported.
full disclosure principle - Answer prescribes that a company report the details behind
financial statements that would impact users' decisions.
going-concern assumption - Answer the accounting information reflects a presumption that
the business will continue operating instead of being closed or sold.
monetary unit assumption - Answer transactions and events can be expressed in monetary,
or money, units.
time period assumption - 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 - Answer this assumption means that a business is accounted for
separately from other business entities, including its owner.
Sarbanes-Oxley Act (SOX) - 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 - 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 - Answer resources a company owns or controls that are expected to yield future
benefits.
liabilities - Answer creditors' claims on assets that reflect company obligations to provide
assets, products, or services to others.
equity - Answer the owner's claim on assets, and is equal to assets minus liabilities.
