C213- Accounting For Decision Makers Updated Actual Questions And Correct Answers

C213- ACCOUNTING FOR DECISION MAKERS UPDATED
ACTUAL QUESTIONS AND CORRECT ANSWERS
Question:
1. Accounting
Answer:
A system for providing "quantitative information, primarily financial in nature, about economics
entities that is intended to be useful in making economic decisions".

Question:
2. American Institute of Certified Public Accountants (AICPA)
Answer:
the professional organization of certified public accountants

Question:
3. Balance Sheet
Answer:
Document which reports the resources of a company (the assets), the company's obligations (the
liabilities), and the owners' equity, which represents how much money has been invested in the
company by its owners.

Question:
4. Bookkeeping
Answer:
The preservation of a systematic, quantitative record of an activity.

Question:
5. Certified Public Accountant (CPA)
Answer:
A person who has taken a minimum number of college-level accounting classes, has passed the
dreaded CPA exam, and has met other requirements set by his or her state.

Question:
6. Financial Accounting
Answer:
The name given to accounting information provided for and used by external users.

Question:
7. Financial Accounting Standards Board (FASB)
Answer:
Private, non-profit body that sets accounting standards in the United States.

Question:
8. Financial Statements
Answer:
The three primary financial information documents: the balance sheet, income statement, and
statement of cash flows.

,Question:
9. Internal Revenue Service (IRS)
Answer:
The government agency responsible for tax collection and tax law enforcement.

Question:
10. Income Statement
Answer:
This document reports the amount of net income earned by company during a period, annual and
quarterly income statement being the most common.

Question:
11. International Accounting Standards Board (IASB)
Answer:
And independent, international body formed to develop worldwide accounting

Question:
12. International Financial Reporting Standards (IFRS)
Answer:
The accounting standards produced by the IASB.

Question:
13. Managerial Accounting
Answer:
The name given to accounting systems designed for internal users.

Question:
14. Public Company Accounting Oversight Board (PCAOB)
Answer:
A private, non-profit organization that effectively serves as an arm of the SEC in registering,
inspecting, and disciplining the auditors of all publicly traded companies.

Question:
15. Statement of Cash Flows
Answer:
This document reports the amount of cash collected and paid out by a company in the following three
types of activities: operating, investing, and financing.

Question:
16. Accounting Equation
Answer:
Assets = Liabilities + Owner's Equity (A = L + OE)

Question:
17. Accumulated Other Comprehensive Income
Answer:
The source of these increased assets

,Question:
18. Assets
Answer:
Assets are the firm's economic resources, formally defined as "probable future economic benefits
obtained or controlled by a particular entity as a result of past transactions or events.

Question:
19. Balance Sheet
Answer:
A statement of financial position that shows the resources the company owns or controls and the
claims on those resources.

Question:
20. Book Value
Answer:
The book value of an asset is the asset's cost minus the asset's accumulated depreciation

Question:
21. Comparability
Answer:
Information that becomes much more useful when it can be related to a benchmark or standard

Question:
22. Owners Equity (Residual Interest)
Answer:
The dollar value of the assets after deducting the dollar value of liabilities.

Question:
23. Residual interest equation
Answer:
Assets- Liabilities = Owners Equity

Question:
24. Basic formula for Income Statement
Answer:
Revenues /Gains- Expenses/ Losses = Net Income (positive amount) or Net Loss (if negative amount)

Question:
25. Conservatism
Answer:
a pervasive factor in accounting, can be summarized as follows: When in doubt, recognize all losses
but don't recognize any gains.

Question:
26. Consitency

, Answer:
The consistency principle states that, once you adopt an accounting principle or method, continue to
follow it consistently in future accounting periods

Question:
27. Earnings Per Share (EPS)
Answer:
EPS tells the owner of one share of stock what he or she really wants to know

Question:
28. Entity
Answer:
The idea that personal financial activity is kept separate from business financial activity

Question:
29. Expenses
Answer:
The amount of assets consumed from the performance of business operations and thus are the opposite
of revenues

Question:
30. External audit
Answer:
audit conducted by external (independent) qualified accountant(s)

Question:
31. Financial Activities
Answer:
Those activities whereby cash is obtained from, or repaid to, owners and creditors

Question:
32. Gains
Answer:
Refers to money made on activities outside the normal business of a company

Question:
33. Going Concern Assumption
Answer:
allows the readers of financial statements to assume that the company will continue on long enough to
carry out its objectives and commitments.

Question:
34. Historical Cost Convention
Answer:
An accounting technique that values an asset for balance sheet purposes at the price paid for the asset
at the time of its acquisition