PRAXIS 5101 Exam 2023

PRAXIS 5101 Exam 2023 Assets - ANS-Something valuable that an entity owns, benefits from, or has use of, in generating income. Different types of assets - ANS-Fixed, variable, intangible, tangible examples of fixed assets - ANS-Tangible assets used to generate profit and will not be turned into cash within the year: "plant," land, computer equipment, furniture, cars, buildings, and equipment used to make products What are variable assets - ANS-May be transformed to cash sooner; inventory of product and accounts receivable What are intangible assets? - ANS-Not physical-brand names, intellectual property- are high in value What is liquidity? - ANS-How easy it is to turn an item into cash without losing any money What is equity? - ANS-In business, it shows what the owner has contributed in addition to retained earnings; ownership minus debts What is depreciation? - ANS-Loss of value for any reason. What is cash flow? - ANS-the total amount of money being transferred into and out of a business; revenues and/or expenses What is GAAP? - ANS-Generally accepted accounting principles. A set of rules and practices, having substantial authortitative support, that accounting profession recognizes as a general guideline for a financial reporting purposes; standardized how income statements, balance sheets, and cash flow statements are prepared How is GAAP used for investors? - ANS-So investors understand what they are getting when they receive statements What does GAAP standardize/cover? - ANS-Economic activity measurement, timing disclosures, and how financial statements are prepared and presented. Who requires GAAP? - ANS-Companies regulated by the US Securities and Exchange Commission (SEC) Who issues GAAP through pronouncements? - ANS-Financial Accounting Standards Board (FASB) CONTINUES...