C213 Exam Questions Andanswers 2022/2023

Identify the purposes of accounting. - Answer - An accounting system is used by a business (1) to handle routine bookkeeping tasks and (2) to structure the information so it can be used to evaluate the performance and status of the business. Identify users of financial statements - Answer - Lenders, Investors, Management, Supplies and Customers, employees, competitors, government agencies, politicians, and the press Differentiate the rules of important accreditation organizations. - Answer - FASB, SEC, AICPA, PCAOB, IRS, IASB, SOX Sarbanes-Oxley Act - Answer - increased the U.S. federal government oversight of the audit process and the preparation of the financial statements. Financial Accounting Standards Board (FASB). - Answer - Governmental body that sets accounting standards in the United States. FASB's rules/standards are called: - Answer - "generally accepted accounting principles" (GAAP). Identify US Accounting rules and their origins. - Answer - GAAP and FASB 1973 Securities and Exchange Commission - Answer - In response to the stock market crash of 1929, Congress created the Securities and Exchange Commission (SEC). Part of the SEC's job is to make sure that investors are provided with full and fair information about publicly traded companies. Who establishes accounting standards - Answer - As part of its regulatory role, the SEC has been granted by Congress specific legal authority to establish accounting standards for companies soliciting investment funds from the American public. For now, the SEC refrains from exercising this authority and allows the FASB to set U.S. accounting standards. American Institute of Certified Public Accountants (AICPA) - Answer - Professional organization for certified publish accountants in the United States AICPA - Answer - AICPA provides continuing educational service to its members and also acts as a political voice to lobby on behalf of its membership. The AICPA is responsible for preparing and grading the CPA examination in addition to maintaining the integrity of the accounting profession through its Code of Professional Conduct.