Principles of Accounting Exam 1 Study Guide (2024): With Questions & Answers (Rated A+)

Principles of Accounting Exam 1 Study Guide (2024): With Questions & Answers (Rated A+) Principles of Accounting Exam 1 Study Guide (2024): With Questions & Answers (Rated A+) What is accounting ? - ANSWER - the information system that identifies, records, and communicates the economic events of an organization to interested users What are the three basic activities of Accounting ? - ANSWER - Identifying, recording, and communicating Internal Users - ANSWER - Managers who plan, organize, and run the business. Ex: Marketing Managers, Finance Directors External Users - ANSWER - Individuals, and organizations outside a company who want financial information about the company. Investors (Owners) - ANSWER - Decide whether to buy, hold, or sell ownership shares of a company. Creditors (Bankers and Suppliers) - ANSWER - Evaluate the risks of granting credit or lending money. Why is Ethics a fundamental building block of business ? - ANSWER - Helps to keep dependable, and accurate financial reporting. What is SOX ? - ANSWER - Sarbanes-Oxley Act: Law passed by Congress intended to reduce unethical corporate behavior. What are Generally Accepted Accounting Principles ? (GAAP) - ANSWER - Common standards that indicate how to report economic events. Financial Accounting Standards Board (FASB): - ANSWER - A private organization that establishes GAAP in the U.S. Security and Exchange Commission (SEC): - ANSWER - A governmental agency that oversees U.S. financial markets and accounting standard-setting bodies. International Accounting Standards Board (IASB): - ANSWER - An accounting standard-setting body that issues standards adopted by many countries outside the U.S.