BMAL 590 BUSINESS FINANCE QUESTIONS WITH CORRECT ANSWERS

General Accepted Accounting Principles (GAAP) CORRECT ANSWER the rules created by the U.S. government for accounting. This requires public companies to generate financial statements. Financial Accounting Standards Board (FASB) CORRECT ANSWER a body that examines controversial accounting topics and issues standards that, in terms of their impact on accounting practices, almost have the force of law. Securities and Exchange Commission (SEC) CORRECT ANSWER regulates publicly traded U.S. companies as well as the nation's stock and bonds markets. It mandates that companies generate financial statements following international accounting standards (IAS). Public Company Accounting Oversight Board (PCAOB) CORRECT ANSWER Effectively gives the EC authority to oversee the accounting professions activities. 4 Key Financial Statements required by the SEC are CORRECT ANSWER 1. balance sheet 2. income statement 3. statement of retained earnings 4. statement of cash flows International Financial Reporting Standards (IFRS) CORRECT ANSWER used in many countries as the regulatory basis for the preparation of financial statements. Designed to provide common global language for financial reporting, so that published information is comparable across international boundaries. Balance Sheet CORRECT ANSWER Presents a 'snapshot' view of the company's financial position at a specific moment in time. A firm's assets must equal the combined value of its liabilities and the stockholders' equity. Assets = Liabilities + Stockholders' Equity. Balance sheet entries: 1. Assets- The most liquid asset (cash) appears first and the least liquid (fixed assets) come last. 2. Current Liabilities are those that must be paid within one year and include accounts payable, notes payable, and accrued expenses. Long term liabilities - are due after more than a year and include deferred taxes and long term debt.