Accounting Crash Course Exam Questions And Answers. Verified and Updated.

Accounting Crash Course Exam Questions And Answers. Verified and Updated. Accounting is important for - answerfirm's officers, investors, lenders, and the general public Generally Accepted Accounting Principles (GAAP) - answera set of accounting standards that is used in the preparation of financial statements Securities and Exchange Commission (SEC) - answer-division of corporate finance: oversees financial reporting by corporations Financial Accounting Standards Board (FASB) - answerTypes of pronouncements: -Statements of Financial Accounting Standards -Interpretations -Financial Accounting Concepts -Emerging Issues Task Force Statements International Financial Reporting Standards (IFRS) - answerunified set of international accounting standards Assumption 1: Accounting Entity - answer-a company is considered a separate "living" enterprise apart from its owners -it is engaged in clearly-defined activities -regularly reports its financial health to the general publics -pays taxes and can file lawsuits Assumption 2: Going Concern - answer-a corporation is assumed to remain in existence indefinitely -assets and liabilities are recognized values that assume the company will not have to sell them at liquidation Assumption 3: Measurement - answer-financial statements must be reported in the national monetary unit -can only show measurable activities of a corporation EXAM STUDY MATERIALS July 24, 2024 1:33:58 PM Assumption 4: Periodicity - answer-companies are required to file annual and interim reports -a fiscal year is frequently but not always aligned with the calendar year Principle 1: Historical Cost - answer-financial statements report companies' resources at an initial historical cost -represents the easiest measurement method without a need a for appraisal and revaluation -minimized management discretion and subjectivity -IFRS is more willing to allow this subjectivity to avoid misrepresenting the true value of assets Principle 2: Revenue Recognition - answeraccrual basis of accounting dictates that revenues must be recorded when earned and measurable -cannot be recorded until the order is shipped to a customer and collection from that customer (who uses a credit card) is reasonably assured Principle 3: Matching Principle - answercosts associated with making a product must be recorded during the same period as revenue generated from that product Principle 4: Full Disclosure - answercompanies must reveal all relevant economic information that they determine to make a difference to its users -should be accomplished in: financial statements, notes to financial statements, and supplementary information Contraint 1: Estimates & Judgements - answercertain measurements cannot be performed completely accurately and must therefore utilize conservative estimates and judgements Constraint 2: Materiality - answerinclusion and disclosure of financial transactions in financial statements hinge on their size and effect on the company performing them -materiality varies across different entities Constraint 3: Consistency - answerfor each company, the preparation financial statements must utilize measurement techniques and assumptions which are consistent from one period to another Constraint 4: Conservatism - answerfinancial statements should be prepared with a downward measurement bias -assets and revenues should not be overstates, while liabilities and expenses should not be understated Form 10-K - answer-required annual filing -must be filed within 60-90 days within year end EXAM STUDY MATERIALS July 24, 2024 1:33:58 PM -provides the most detailed overview of companies' financial operations and regulations governing them Form 10-Q - answer-publicly-traded companies file a quarterly report with the SEC for the first three quarters -must be filed within 40-45 days of quarter end 10-K vs. 10-Q - answer-10-K's are more detailed -10-K reports are audited by an independent firm while 10-Q filings are reviewed by a CPA but are unaudited Form 8-K - answerrequired filing any time a company undergoes or announces a materially significant event such as a n earnings press release, an acquisition, a disposal of assets, bankruptcy, etc. -usually filed within 4 days of the event Form 14A (Proxy Statement) - answer-required filing prior to companies' annual shareholder meetings -contains detailed information about top officers and their compensations Important Sections of the 10-K - answer-Item 6: selected financial data -Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations -Item 8: Financial Statements and Supplementary Data The regulating body that oversees the development of accounting standards in the U.S. is: - answerFASB FASB formulates accounting standards through the issuance of Statements of Financial Accounting Standards (SFAS). These statements make up the body of accounting rules known as the Generally Accepted Accounting Principles (GAAP). IASB oversees international financial reporting standards (IFRS). Which of the following statements is TRUE? - answerGAAP requires that firms show recorded values for acquired intangible assets such as patents and trademarks on their financial statements EXAM STUDY MATERIALS July 24, 2024 1:33:58 PM GAAP requires that firms only show measurable activities, such as the value of acquired intangible assets. Assets such as employee, customer loyalty and internally-developed trademarks are not shown on financial statements because they're difficult to quantify. Which of the following statements is TRUE? - answerPublicly traded US companies are required to file three 10-Q's and one 10-K annually. Publicly-traded US companies must file