MIE 201, Final Exam/196 Accurate
Questions with Answers
Chapter 14 is - -accounting and financial statements
-Accounting is - -the recording, measurement, and interpretation of
financial information
Large numbers of people and institutions, both within and outside
businesses, use accounting tools to evaluate operations
-The financial accounting standards board - -has been setting principles and
standards of financial accounting and reporting in the private sector since
1973
mission is establishing and improving standards of financial accounting and
reporting for guidance and education of the public including investors, and
users of financial information
-Accounting scandals - -when many accounting firms and businesses failed
to abide by generally accepted accounting principles, or GAAP so the
government took a greater role in making rules, requirements, and policies
for accounting firms and businesses
-Accountants - -functions of accounting are carried out by public or private
accountants
-Certified public accountant (CPA) - -an individual who has been certified by
the state in which he or she practices to provide accounting services ranging
from the preparation of financial records and the filing of tax returns to
complex audits of corporate financial records
either self employed or members of large public accounting firms
Individuals and businesses can hire a CPA
-Sarbanes-Oxley Act - -made accounting firms separate from their
consulting and auditing businesses and punished corporate executives with
potential jail sentences for inaccurate, misleading, or illegal accounting
statements
-Dodd-Frank Act (2010) - -to strengthen the oversight of financial
institutions
,limits the types o assets commercial banks can buy, the amount of capital
they must maintain
-Forensic accounting - -accounting that is fit for legal review
involves analyzing financial documents in search of fraudulent entries or
financial misconduct
a growing area for public accountants
-Private accountants - -hired to prepare and analyze their financial
statements
Large corporations, government agencies, and organizations may employ a
private accountant
titles are controller, tax accountant, or internal auditor they are deeply
involved in many of the most important financial decisions of the
organization they work for
-Certified management accountants (CMAs) - -private accountants can be
CPAs or CMAs by passing a rigorous exam by the Institution of Management
Accountants
-Book keeping - -typically limited to the routine, day to day recording of
business transactions
-Bookkeepers are responsible for - -obtaining and recording the information
that accountants require to analyze a firm's financial position
require less training than accountants
-Accountants require more training than bookkeepers because - -
accountants have to complete a course beyond their 4 year accounting
degree which allows them to understand, interpret, and develop
sophisticated accounting systems necessary to classifying and analyze
complex financial systems
-The 2 users of accounting information - -internal users
external users
-Internal users of accounting information - -board of directors
owners
, managers
business analysts
-External users of accounting information - -government
creditors
stockholders
employees
customers
-Managerial accounting - -refers to the internal use of accounting
statements by managers in planning and directing the organization's
activities
- cash flow
- help prepare an organization's budget
-Cash flow - -managements greatest single concern
the movement of money through an organization over a daily, weekly,
monthly, or yearly basis
if cash flow is inadequate, growing companies will struggle to make
payments to employees, suppliers, and lenders and this is all because of
poor managerial planning
-Budget - -An internal financial plan that forecasts expenses and income
over a set period of time
daily, weekly, monthly, and yearly budgets
financial map
lies in its breakdown of cash inflows and outflows
Expected operating expenses (cash outflows like material costs, taxes,
wages) and operating revenues (cash inflows in the form of payments from
customers) are carefully forecasted
-Master budgets - -Budgets for the entire firm
Questions with Answers
Chapter 14 is - -accounting and financial statements
-Accounting is - -the recording, measurement, and interpretation of
financial information
Large numbers of people and institutions, both within and outside
businesses, use accounting tools to evaluate operations
-The financial accounting standards board - -has been setting principles and
standards of financial accounting and reporting in the private sector since
1973
mission is establishing and improving standards of financial accounting and
reporting for guidance and education of the public including investors, and
users of financial information
-Accounting scandals - -when many accounting firms and businesses failed
to abide by generally accepted accounting principles, or GAAP so the
government took a greater role in making rules, requirements, and policies
for accounting firms and businesses
-Accountants - -functions of accounting are carried out by public or private
accountants
-Certified public accountant (CPA) - -an individual who has been certified by
the state in which he or she practices to provide accounting services ranging
from the preparation of financial records and the filing of tax returns to
complex audits of corporate financial records
either self employed or members of large public accounting firms
Individuals and businesses can hire a CPA
-Sarbanes-Oxley Act - -made accounting firms separate from their
consulting and auditing businesses and punished corporate executives with
potential jail sentences for inaccurate, misleading, or illegal accounting
statements
-Dodd-Frank Act (2010) - -to strengthen the oversight of financial
institutions
,limits the types o assets commercial banks can buy, the amount of capital
they must maintain
-Forensic accounting - -accounting that is fit for legal review
involves analyzing financial documents in search of fraudulent entries or
financial misconduct
a growing area for public accountants
-Private accountants - -hired to prepare and analyze their financial
statements
Large corporations, government agencies, and organizations may employ a
private accountant
titles are controller, tax accountant, or internal auditor they are deeply
involved in many of the most important financial decisions of the
organization they work for
-Certified management accountants (CMAs) - -private accountants can be
CPAs or CMAs by passing a rigorous exam by the Institution of Management
Accountants
-Book keeping - -typically limited to the routine, day to day recording of
business transactions
-Bookkeepers are responsible for - -obtaining and recording the information
that accountants require to analyze a firm's financial position
require less training than accountants
-Accountants require more training than bookkeepers because - -
accountants have to complete a course beyond their 4 year accounting
degree which allows them to understand, interpret, and develop
sophisticated accounting systems necessary to classifying and analyze
complex financial systems
-The 2 users of accounting information - -internal users
external users
-Internal users of accounting information - -board of directors
owners
, managers
business analysts
-External users of accounting information - -government
creditors
stockholders
employees
customers
-Managerial accounting - -refers to the internal use of accounting
statements by managers in planning and directing the organization's
activities
- cash flow
- help prepare an organization's budget
-Cash flow - -managements greatest single concern
the movement of money through an organization over a daily, weekly,
monthly, or yearly basis
if cash flow is inadequate, growing companies will struggle to make
payments to employees, suppliers, and lenders and this is all because of
poor managerial planning
-Budget - -An internal financial plan that forecasts expenses and income
over a set period of time
daily, weekly, monthly, and yearly budgets
financial map
lies in its breakdown of cash inflows and outflows
Expected operating expenses (cash outflows like material costs, taxes,
wages) and operating revenues (cash inflows in the form of payments from
customers) are carefully forecasted
-Master budgets - -Budgets for the entire firm
