MGT 6201 ACCOUNTING WEEK 1
EXAM QUESTIONS AND CORRECT
ANSWERS
What is the primary purpose of financial accounting? - ANSWERS-To provide
meaningful quantitative financial information regarding an entity's activities to
decision makers.
Who are the primary users of financial accounting information? - ANSWERS-
Shareholders, debt holders, managers, investment analysts, customers, and
strategic partners.
What are the two main qualities that make financial information useful? - ANSWERS-
Relevance and faithful representation.
What does GAAP stand for? - ANSWERS-Generally Accepted Accounting
Principles.
What is the role of the SEC in financial accounting? - ANSWERS-The Securities and
Exchange Commission oversees all publicly traded companies.
What is an external audit? - ANSWERS-An audit conducted by an independent party
to provide reasonable assurance that financial statements are free of material
misstatements.
What are the required financial statements? - ANSWERS-Balance Sheet, Income
Statement, Statement of Shareholders' Equity, Statement of Cash Flows, Statement
of Comprehensive Income.
What does a balance sheet describe? - ANSWERS-The sources and uses of funds
of a firm at a point in time.
What are assets? - ANSWERS-Economic resources owned or controlled by a
company that have future economic benefits.
What is the accounting equation? - ANSWERS-Assets = Liabilities + Owners' Equity.
What is the difference between current and long-term assets? - ANSWERS-Current
assets can be converted to cash within a year, while long-term assets cannot.
What are liabilities? - ANSWERS-Future obligations to pay cash, transfer assets, or
provide services to another party.
What is owners' equity? - ANSWERS-The ownership interest in the net assets of an
entity.
EXAM QUESTIONS AND CORRECT
ANSWERS
What is the primary purpose of financial accounting? - ANSWERS-To provide
meaningful quantitative financial information regarding an entity's activities to
decision makers.
Who are the primary users of financial accounting information? - ANSWERS-
Shareholders, debt holders, managers, investment analysts, customers, and
strategic partners.
What are the two main qualities that make financial information useful? - ANSWERS-
Relevance and faithful representation.
What does GAAP stand for? - ANSWERS-Generally Accepted Accounting
Principles.
What is the role of the SEC in financial accounting? - ANSWERS-The Securities and
Exchange Commission oversees all publicly traded companies.
What is an external audit? - ANSWERS-An audit conducted by an independent party
to provide reasonable assurance that financial statements are free of material
misstatements.
What are the required financial statements? - ANSWERS-Balance Sheet, Income
Statement, Statement of Shareholders' Equity, Statement of Cash Flows, Statement
of Comprehensive Income.
What does a balance sheet describe? - ANSWERS-The sources and uses of funds
of a firm at a point in time.
What are assets? - ANSWERS-Economic resources owned or controlled by a
company that have future economic benefits.
What is the accounting equation? - ANSWERS-Assets = Liabilities + Owners' Equity.
What is the difference between current and long-term assets? - ANSWERS-Current
assets can be converted to cash within a year, while long-term assets cannot.
What are liabilities? - ANSWERS-Future obligations to pay cash, transfer assets, or
provide services to another party.
What is owners' equity? - ANSWERS-The ownership interest in the net assets of an
entity.
