D196 WGU EXAM QUESTIONS WITH COMPLETE SOLUTIONS
VERIFIED
What is the role and purpose of accounting ?
Role: To help track income and expenditures, and to provide investors, management,
and government with financial information.
Purpose: To accumulate, measure, and communicate financial information about
businesses and other organizations.
· Who uses accounting information and why?
Potential investors and creditors use accounting information, but basically everyone
uses accounting information. They use it to make internal and external business
decisions.
· What are the important influences on accounting?
Important influences on accounting is the development of the "generally accepted
accounting principles"(GAAP), international business and ethical consideration.
· What is the role of ethics in accounting?
Being an accountant requires honesty and integrity, as well as professional judgement.
So having ethics in accounting is very important.
What are the three main functions of accounting?
The 3 main functions of accounting are: Analyzing, Bookkeeping, and Evaluating(ABE).
The Financial Accounting Standards Board(FASB)
An organization responsible for studying accounting issues and establishing standards
a) Private group
b) Public process
c) Establishes GAAP
The Governmental Accounting Standards Board(GASB)
A private, non governmental organization who sets accounting and financial reporting
standards for state and local governments
,Securities and Exchange Commission(SEC)
Regulates stock exchanges
a) Has legal authority to regulate financial markets and accounting
b) Usually defers to the FASB on accounting matters
The Public Company Accounting Oversight Board(PCAOB)
Oversees all accounting firms.
Internal Revenue Service(IRS)
Collects and regulates income taxes
International Accounting Standards Board(IASB)
The FASB of the world(except the USA)
Assets
assets are what we OWN.
Common Assets:
-) Cash
-) Accounts receivable
-) Inventory
-) Buildings
-) Prepaid
Liabilities
An obligation to pay cash, transfer other assets, or provide services to someone.
A) Liabilities are what we OWE.
B) Common Liabilities:
-) Accounts Payable
-) Taxes Payable
-) Mortgage Payable
-) Unearned Revenue
Owners Equity
The owners share of earnings.
A) Sources of equity:
-) Capital/Common Stock
-) Retained Earnings
, What is the Accounting Cycle and how does it work?
The accounting cycle is the procedure for analyzing, recording, summarizing, and
preparing the transactions of a business. The accounting cycle works by turning
transactions into financial statements through these steps:
Step 1: Analyze Transactions
Step 2: Record the effects of transactions
Step 3: Summarize the effects
Step 4: Prepare reports
· What is the Accounting Equation?
Assets=Liability+Equity(ALE)
Can you explain the 'expanded' accounting equation?
Assets=Liabilities+(Capital Stock+Cumulative Net Income-Cumulative Dividends)
What are the four financial statements covered in this module?
Balance Sheet, Income Statement, Statement of Cash Flows, Statement of Retained
Earnings
Can you define and explain the purpose of the Balance Sheet and its
components?
A balance sheet is the statement of the company's financial position at a certain period,
and records the company's assets, liabilities, and owners' equity. The purpose of a
balance sheet is to report the resources of a company, the company's obligations, and
the owners' equity.
The components of a balance sheet are: Assets, Liabilities, and Owner's equity.
-) The balance sheet equation: Assets=Liabilities+Equity(ALE).
-) Classified Balance Sheet: A balance sheet that distinguishes between current and
long-term assets.
Can you define and explain the purpose of the Income Statement and the
components that it contains?
An income statement is the statement of earnings, and records the amount of
revenue(profits) generated, and costs incurred(expenses) by a company during a period
of time(a month, a quarter, a year).
The purpose of an income statement is to assess a company's profitability by looking at
VERIFIED
What is the role and purpose of accounting ?
Role: To help track income and expenditures, and to provide investors, management,
and government with financial information.
Purpose: To accumulate, measure, and communicate financial information about
businesses and other organizations.
· Who uses accounting information and why?
Potential investors and creditors use accounting information, but basically everyone
uses accounting information. They use it to make internal and external business
decisions.
· What are the important influences on accounting?
Important influences on accounting is the development of the "generally accepted
accounting principles"(GAAP), international business and ethical consideration.
· What is the role of ethics in accounting?
Being an accountant requires honesty and integrity, as well as professional judgement.
So having ethics in accounting is very important.
What are the three main functions of accounting?
The 3 main functions of accounting are: Analyzing, Bookkeeping, and Evaluating(ABE).
The Financial Accounting Standards Board(FASB)
An organization responsible for studying accounting issues and establishing standards
a) Private group
b) Public process
c) Establishes GAAP
The Governmental Accounting Standards Board(GASB)
A private, non governmental organization who sets accounting and financial reporting
standards for state and local governments
,Securities and Exchange Commission(SEC)
Regulates stock exchanges
a) Has legal authority to regulate financial markets and accounting
b) Usually defers to the FASB on accounting matters
The Public Company Accounting Oversight Board(PCAOB)
Oversees all accounting firms.
Internal Revenue Service(IRS)
Collects and regulates income taxes
International Accounting Standards Board(IASB)
The FASB of the world(except the USA)
Assets
assets are what we OWN.
Common Assets:
-) Cash
-) Accounts receivable
-) Inventory
-) Buildings
-) Prepaid
Liabilities
An obligation to pay cash, transfer other assets, or provide services to someone.
A) Liabilities are what we OWE.
B) Common Liabilities:
-) Accounts Payable
-) Taxes Payable
-) Mortgage Payable
-) Unearned Revenue
Owners Equity
The owners share of earnings.
A) Sources of equity:
-) Capital/Common Stock
-) Retained Earnings
, What is the Accounting Cycle and how does it work?
The accounting cycle is the procedure for analyzing, recording, summarizing, and
preparing the transactions of a business. The accounting cycle works by turning
transactions into financial statements through these steps:
Step 1: Analyze Transactions
Step 2: Record the effects of transactions
Step 3: Summarize the effects
Step 4: Prepare reports
· What is the Accounting Equation?
Assets=Liability+Equity(ALE)
Can you explain the 'expanded' accounting equation?
Assets=Liabilities+(Capital Stock+Cumulative Net Income-Cumulative Dividends)
What are the four financial statements covered in this module?
Balance Sheet, Income Statement, Statement of Cash Flows, Statement of Retained
Earnings
Can you define and explain the purpose of the Balance Sheet and its
components?
A balance sheet is the statement of the company's financial position at a certain period,
and records the company's assets, liabilities, and owners' equity. The purpose of a
balance sheet is to report the resources of a company, the company's obligations, and
the owners' equity.
The components of a balance sheet are: Assets, Liabilities, and Owner's equity.
-) The balance sheet equation: Assets=Liabilities+Equity(ALE).
-) Classified Balance Sheet: A balance sheet that distinguishes between current and
long-term assets.
Can you define and explain the purpose of the Income Statement and the
components that it contains?
An income statement is the statement of earnings, and records the amount of
revenue(profits) generated, and costs incurred(expenses) by a company during a period
of time(a month, a quarter, a year).
The purpose of an income statement is to assess a company's profitability by looking at
