CORRECT ANSWERS|LATEST !!!!2026|GRADED
Purpose of accounting - ANSWER Accounting is the recording of the day-to-day
financial activities of a company and the organization of that information into summary
reports used to evaluate the company's financial status.
Bookkeeping is a part of accounting. Bookkeeping refers to the process of recording
transactions into various accounts, which is the first step in accounting. The next step is to
analyze the accounts and organize them into financial statements and other useful reports.
(Reference topic 1.1)
The balance sheet - ANSWER reports a company's assets, liabilities, and owners'
equity. It reports the financial position of a firm at a point in time.
Income statement - ANSWER reports the amount of net income earned by a
company during a period. Net income is the excess of a company's revenues over its
expenses. It reports the financial performance of a firm over a period of time.
Statement of cash flows - ANSWER reports the amount of cash collected and paid
out by a company in the following three types of activities: operating, investing, and
financing over a period of time. (Reference topic 1.2)
Fin Statement Users: Lenders - ANSWER Banks use companies' financial statements
in making decisions about commercial loans. The financial statements are useful because
they help the lender predict the future ability of the borrower to repay the loan.
Fin Statement Users: Investors - ANSWER Investors want information to help them
estimate how much cash they can expect to directly receive from the business in the future
if they invest in it now.
1
,Fin Statement Users: Company Management - ANSWER Managers use financial
accounting data to formulate company goals, to compute bonuses for employees, and to
illuminate company weaknesses.
Fin Statement Users: Suppliers and Customers - ANSWER Suppliers, customers, and
employees use financial statements to tell them about the long-run prospects of a company.
Fin Statement Users: Employees - ANSWER Financial statement data, as mentioned
earlier, are used in determining employee bonuses. In addition, financial accounting
information can help an employee evaluate the employer's ability to fulfill its long-run
promises, such as for pensions and retiree health care benefits. Financial statements are also
important in contract negotiations between labor and management.
Fin Statement Users: Competitors - ANSWER Competitors use financial accounting
information to reveal strategic opportunities within their industry.
Government Agencies - ANSWER Government agencies use financial statement data
to bolster political and regulatory positions for and against companies.
Fin Statement Users: The Press - ANSWER Reporters use financial accounting data as
background information and to indicate which companies are undergoing significant
changes in financial status. (Reference Topic 1.3)
Fin Statement Users: Politicians - ANSWER Politicians use financial statement data to
bolster political and regulatory positions for and against companies.
Acct Rules: Financial Accountings Standards Board (FASB) - ANSWER sets accounting
rules for the private section in the U.S.. It is a private, non-profit body established and
supported by the joint efforts of the U.S. business community, financial analysts, and
practicing accountants.
2
, The FASB has no legal power to enforce the accounting standards it sets but maintains its
influence by carefully protecting its prestige and reputation. The standards it sets are called
Generally Accepted Accounting Standards (GAAP). These are a common set of accounting
principles, standards, and procedures that companies must follow when they compile their
financial statements. (Reference Topic 1.4)
Acct Rules: Securities and Exchange Commission (SEC) - ANSWER has the legal
authority to set accounting rules, but has deferred that responsibility to the FASB in most
cases. The SEC regulates U.S. stock exchanges and seeks to create a fair information
environment in which investors can buy and sell stocks without fear that companies who sell
stocks to the general public are hiding or manipulating financial data. (Reference topic 1.5)
Acct Org: CPA Accreditation - ANSWER The American Institute of Certified Public
Accountants (AICPA) is the professional organization of certified public accountants (cpas) in
the United States. A CPA is someone who has taken a minimum number of college-level
accounting classes, has passed the CPA exam, and has met other requirements set by his or
her state. A CPA firm is a company that provides freelance business advice, particularly in
connection with accounting issues and executes the vast majority of external audits in the
US.
The AICPA sets ethical standards for cpas, provides continuing education for them, writes
and grades the CPA exam, lobbies for legislation favored by cpas, and provides other support
to cpas. Its oversight of the CPA exam is its main role in accreditation. However, to be
accredited as a CPA you must meet the requirements of the state in which you plan to
practice. The requirements for each state are set by that state's legislature and overseen by
that state's Board of Accountancy, which is a state agency. (Reference Topic 1.5)
Acct Org: Public Company Accounting Oversight Board (PCAOB) -
ANSWER determines who can audit public companies regardless of whether the
audit firm is accredited by a state Board of Accountancy. Thus, they accredit firms that can
audit public companies.
Current Trends changing Accounting: Globalization - ANSWER As more and more
business do business globally, capital flows more freely across national boundaries. This
means investors can choose to invest in firms all over the planet. To help them make
investment decisions, the global accounting and regulatory communities are working to
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Purpose of accounting - ANSWER Accounting is the recording of the day-to-day
financial activities of a company and the organization of that information into summary
reports used to evaluate the company's financial status.
Bookkeeping is a part of accounting. Bookkeeping refers to the process of recording
transactions into various accounts, which is the first step in accounting. The next step is to
analyze the accounts and organize them into financial statements and other useful reports.
(Reference topic 1.1)
The balance sheet - ANSWER reports a company's assets, liabilities, and owners'
equity. It reports the financial position of a firm at a point in time.
Income statement - ANSWER reports the amount of net income earned by a
company during a period. Net income is the excess of a company's revenues over its
expenses. It reports the financial performance of a firm over a period of time.
Statement of cash flows - ANSWER reports the amount of cash collected and paid
out by a company in the following three types of activities: operating, investing, and
financing over a period of time. (Reference topic 1.2)
Fin Statement Users: Lenders - ANSWER Banks use companies' financial statements
in making decisions about commercial loans. The financial statements are useful because
they help the lender predict the future ability of the borrower to repay the loan.
Fin Statement Users: Investors - ANSWER Investors want information to help them
estimate how much cash they can expect to directly receive from the business in the future
if they invest in it now.
1
,Fin Statement Users: Company Management - ANSWER Managers use financial
accounting data to formulate company goals, to compute bonuses for employees, and to
illuminate company weaknesses.
Fin Statement Users: Suppliers and Customers - ANSWER Suppliers, customers, and
employees use financial statements to tell them about the long-run prospects of a company.
Fin Statement Users: Employees - ANSWER Financial statement data, as mentioned
earlier, are used in determining employee bonuses. In addition, financial accounting
information can help an employee evaluate the employer's ability to fulfill its long-run
promises, such as for pensions and retiree health care benefits. Financial statements are also
important in contract negotiations between labor and management.
Fin Statement Users: Competitors - ANSWER Competitors use financial accounting
information to reveal strategic opportunities within their industry.
Government Agencies - ANSWER Government agencies use financial statement data
to bolster political and regulatory positions for and against companies.
Fin Statement Users: The Press - ANSWER Reporters use financial accounting data as
background information and to indicate which companies are undergoing significant
changes in financial status. (Reference Topic 1.3)
Fin Statement Users: Politicians - ANSWER Politicians use financial statement data to
bolster political and regulatory positions for and against companies.
Acct Rules: Financial Accountings Standards Board (FASB) - ANSWER sets accounting
rules for the private section in the U.S.. It is a private, non-profit body established and
supported by the joint efforts of the U.S. business community, financial analysts, and
practicing accountants.
2
, The FASB has no legal power to enforce the accounting standards it sets but maintains its
influence by carefully protecting its prestige and reputation. The standards it sets are called
Generally Accepted Accounting Standards (GAAP). These are a common set of accounting
principles, standards, and procedures that companies must follow when they compile their
financial statements. (Reference Topic 1.4)
Acct Rules: Securities and Exchange Commission (SEC) - ANSWER has the legal
authority to set accounting rules, but has deferred that responsibility to the FASB in most
cases. The SEC regulates U.S. stock exchanges and seeks to create a fair information
environment in which investors can buy and sell stocks without fear that companies who sell
stocks to the general public are hiding or manipulating financial data. (Reference topic 1.5)
Acct Org: CPA Accreditation - ANSWER The American Institute of Certified Public
Accountants (AICPA) is the professional organization of certified public accountants (cpas) in
the United States. A CPA is someone who has taken a minimum number of college-level
accounting classes, has passed the CPA exam, and has met other requirements set by his or
her state. A CPA firm is a company that provides freelance business advice, particularly in
connection with accounting issues and executes the vast majority of external audits in the
US.
The AICPA sets ethical standards for cpas, provides continuing education for them, writes
and grades the CPA exam, lobbies for legislation favored by cpas, and provides other support
to cpas. Its oversight of the CPA exam is its main role in accreditation. However, to be
accredited as a CPA you must meet the requirements of the state in which you plan to
practice. The requirements for each state are set by that state's legislature and overseen by
that state's Board of Accountancy, which is a state agency. (Reference Topic 1.5)
Acct Org: Public Company Accounting Oversight Board (PCAOB) -
ANSWER determines who can audit public companies regardless of whether the
audit firm is accredited by a state Board of Accountancy. Thus, they accredit firms that can
audit public companies.
Current Trends changing Accounting: Globalization - ANSWER As more and more
business do business globally, capital flows more freely across national boundaries. This
means investors can choose to invest in firms all over the planet. To help them make
investment decisions, the global accounting and regulatory communities are working to
3
