ACCOUNTING CRASH COURSE LATEST EXAM QUESTIONS
AND CORRECT DETAILED ANSWERS (VERIFIED
ANSWERS) ALREADY GRADED A+
Financial Accounting - ANSWERS-The process that culminates in the preparation of financial
reports on the enterprise for use by both *internal* and *external* parties.
Objective of Financial Reporting - ANSWERS-Provide *information about the reporting entity*
that is *useful to* present and potential to equity *investors, lenders, and others.*
Securities and Exchange Commission (SEC) - ANSWERS--Federal agency created to help
*develop and standardize financial information presented to stockholders*
-Companies that issue securities to public are required to file with SEC
-Have powers to prescribe auditing practices and standards to be employed by companies that
fall within its jurisdiction
-Requires registrants to adhere to GAAP
-Relies on FASB to develop accounting standards
-Mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital
formation
-Regulations require filing of annual (10-K) & quarterly (10-Q) reports and others
-Enforcement authority
American Institute of CPAs (AICPA) - ANSWERS-the National professional org of CPAs
-Important in the development of GAAP
-Established the Committee on Accounting Procedure (CAP) → Accounting Principles Board
(APB) → FASB
,How was the AICPA created? - ANSWERS-1. Established the committee of accounting procedure
(*CAP*)
2. Accounting principles board (*APB*)
3. Financial Accounting and standards Board (*FASB*)
Financial Accounting Standards Board (FASB) - ANSWERS--Major organization of the *standard-
setting structure for financial accounting*
-Wants to establish and improve standards of financial accounting and reporting for the
guidance and education of the public
-Accounting guidance issued by FASB is considered GAAP
-Issues: Accounting standards updates & financial accounting concepts
Generally Accepted Accounting Principles (GAAP) - ANSWERS-*common set of accounting
standards and procedures* for which either an authoritative accounting rule making body has
established a principle of reporting in a given area, or over time, a given practice has been
accepted as appropriate because of its *universal application*
FASB Codification - ANSWERS--Provides all the authoritative literature related to a particular
topic in one place
-Topic → subtopics → sections → paragraphs
Major Challenges in Financial Reporting - ANSWERS-GAAP is as much a product of *political
action* as it is of *careful logic* or empirical findings
Measurement Principle - ANSWERS-- *Historical cost* (maintain same value originally assigned)
- *Fair value* (estimate of the potential price)
, Revenue Recognition Principle - ANSWERS-Requires companies recognize revenue in the
*period* performance *obligation is satisfied*.
Expense Recognition Principle - ANSWERS-Expenses follows the revenues.
Full Disclosure Principle - ANSWERS-Providing information that is of *sufficient importance to
influence and inform the judgement and decisions of an informed user* (financial statements,
notes to the statements, supplementary information).
Two Perspectives of Time - ANSWERS-1. Date (point in time): *"as of"*; balance sheet
2. Time between two dates (period): *"for the year ended"*; income statement, cash flow
DEAD CRLS - ANSWERS-*Debits* INCREASE
*E*xpenses
*A*ssets
*D*ividends declared
*Credits* INCREASE
*R*evenues
*L*iabilities
*S*tockholders Equity
Owners Equity is made up of ... - ANSWERS--Net contributed capital: *accumulated capital
contributed* to the firm *by owners* to repurchase shares since inception
-*Retained earnings*: accumulated earnings of the firm less accumulated dividend payments
since inception
AND CORRECT DETAILED ANSWERS (VERIFIED
ANSWERS) ALREADY GRADED A+
Financial Accounting - ANSWERS-The process that culminates in the preparation of financial
reports on the enterprise for use by both *internal* and *external* parties.
Objective of Financial Reporting - ANSWERS-Provide *information about the reporting entity*
that is *useful to* present and potential to equity *investors, lenders, and others.*
Securities and Exchange Commission (SEC) - ANSWERS--Federal agency created to help
*develop and standardize financial information presented to stockholders*
-Companies that issue securities to public are required to file with SEC
-Have powers to prescribe auditing practices and standards to be employed by companies that
fall within its jurisdiction
-Requires registrants to adhere to GAAP
-Relies on FASB to develop accounting standards
-Mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital
formation
-Regulations require filing of annual (10-K) & quarterly (10-Q) reports and others
-Enforcement authority
American Institute of CPAs (AICPA) - ANSWERS-the National professional org of CPAs
-Important in the development of GAAP
-Established the Committee on Accounting Procedure (CAP) → Accounting Principles Board
(APB) → FASB
,How was the AICPA created? - ANSWERS-1. Established the committee of accounting procedure
(*CAP*)
2. Accounting principles board (*APB*)
3. Financial Accounting and standards Board (*FASB*)
Financial Accounting Standards Board (FASB) - ANSWERS--Major organization of the *standard-
setting structure for financial accounting*
-Wants to establish and improve standards of financial accounting and reporting for the
guidance and education of the public
-Accounting guidance issued by FASB is considered GAAP
-Issues: Accounting standards updates & financial accounting concepts
Generally Accepted Accounting Principles (GAAP) - ANSWERS-*common set of accounting
standards and procedures* for which either an authoritative accounting rule making body has
established a principle of reporting in a given area, or over time, a given practice has been
accepted as appropriate because of its *universal application*
FASB Codification - ANSWERS--Provides all the authoritative literature related to a particular
topic in one place
-Topic → subtopics → sections → paragraphs
Major Challenges in Financial Reporting - ANSWERS-GAAP is as much a product of *political
action* as it is of *careful logic* or empirical findings
Measurement Principle - ANSWERS-- *Historical cost* (maintain same value originally assigned)
- *Fair value* (estimate of the potential price)
, Revenue Recognition Principle - ANSWERS-Requires companies recognize revenue in the
*period* performance *obligation is satisfied*.
Expense Recognition Principle - ANSWERS-Expenses follows the revenues.
Full Disclosure Principle - ANSWERS-Providing information that is of *sufficient importance to
influence and inform the judgement and decisions of an informed user* (financial statements,
notes to the statements, supplementary information).
Two Perspectives of Time - ANSWERS-1. Date (point in time): *"as of"*; balance sheet
2. Time between two dates (period): *"for the year ended"*; income statement, cash flow
DEAD CRLS - ANSWERS-*Debits* INCREASE
*E*xpenses
*A*ssets
*D*ividends declared
*Credits* INCREASE
*R*evenues
*L*iabilities
*S*tockholders Equity
Owners Equity is made up of ... - ANSWERS--Net contributed capital: *accumulated capital
contributed* to the firm *by owners* to repurchase shares since inception
-*Retained earnings*: accumulated earnings of the firm less accumulated dividend payments
since inception
