WGU-C213 Final Exam Accounting for Decision
Makers Questions and Answers ()
Accounting - ANSWER-A system of providing "quantitative information, primarily
financial in nature, about economic entities that is intended to be useful in making
economic decisions."
American Institute of Certified Public Accountants (AICPA) - ANSWER-The professional
organization of certified public accountants in the United States.
Balance Sheet - ANSWER-Document which reports the resources of a company (the
assets), the company's obligations (the liabilities), and the owners' equity, which
represents how much money has been invested in the company by its owners.
Bookkeeping - ANSWER-The preservation of a systematic, quantitative record of an
activity.
Certified Public Accountant - ANSWER-A person who has taken a minimum number of
college-level accounting classes, has passed the dreaded CPA exam, and has met
other requirements set by his or her state.
Financial Accounting - ANSWER-The name given to accounting information provided
for and used by external users.
Financial Accounting Standards Board (FASB) - ANSWER-Private, non-profit body that
sets accounting standards in the United States.
Financial Statements - ANSWER-The three primary financial information documents:
the balance sheet, income statement, and statement of cash flows.
Income Statement - ANSWER-This document reports the amount of net income earned
by a company during a period, with annual and quarterly income statements being the
most common.
Internal Revenue Service (IRS) - ANSWER-The government agency responsible for tax
collection and tax law enforcement.
International Accounting Standards Board (IASB) - ANSWER-An independent,
international body formed to develop worldwide accounting standards.
International Financial Reporting Standards (IFRS) - ANSWER-The accounting
standards produced by the IASB.
Managerial Accounting - ANSWER-The name given to accounting systems designed for
internal users.
,Public Company Accounting Oversight Board (PCAOB) - ANSWER-A private, non-profit
organization that effectively serves as an arm of the SEC in registering, inspecting, and
disciplining the auditors of all publicly traded companies.
Statement of Cash Flows - ANSWER-This document reports the amount of cash
collected and paid out by a company in the following three types of activities: operating,
investing, and financing.
Accounting Equation - ANSWER-Assets = Liabilities + Owners' Equity
Accumulated Other Comprehensive Income - ANSWER-The source of these increased
assets
Assets - ANSWER-Assets are the firm's economic resources, formally defined as
"probable future economic benefits obtained or controlled by a particular entity as a
result of past transactions or events
Balance Sheet - ANSWER-A statement of financial position shows the financial
resources the company owns or controls and the claims on those resources
Book Value - ANSWER-The book value of an asset is the asset's cost minus the asset's
accumulated depreciation.
Comparability - ANSWER-Information that becomes much more useful when it can be
related to a benchmark or standard
Conservatism - ANSWER-a pervasive factor in accounting, can be summarized as
follows: When in doubt, recognize all losses but don't recognize any gains.
Consistency - ANSWER-The consistency principle states that, once you adopt an
accounting principle or method, continue to follow it consistently in future accounting
periods.
Earnings Per Share (EPS) - ANSWER-EPS tells the owner of one share of stock what
he or she really wants to know
Entity Concept - ANSWER-The idea that personal financial activity is kept separate from
business financial activity
Expenses - ANSWER-The amount of assets consumed from the performance of
business operations and thus are the opposite of revenues
External Audit - ANSWER-audit conducted by external (independent) qualified
accountant(s)
, Financing Activities - ANSWER-Those activities whereby cash is obtained from, or
repaid to, owners and creditors
Gains - ANSWER-Refers to money made on activities outside the normal business of a
company
Going Concern Assumption - ANSWER-allows the readers of financial statements to
assume that the company will continue on long enough to carry out its objectives and
commitments.
Historical Cost Convention - ANSWER-An accounting technique that values an asset for
balance sheet purposes at the price paid for the asset at the time of its acquisition
Income Statement - ANSWER-A company's financial performance for a specified period
of time.
Investing Activities - ANSWER-The purchase and sale of land, buildings, and
equipment. Investing activities also include buying and selling stocks of other
companies
Liabilities - ANSWER-the future sacrifices of economic benefits that the entity is
presently obliged to make to other entities as a result of past transactions or other past
events
Liquidity - ANSWER-the ease with which the item can be turned into cash
Losses - ANSWER-Refers to money lost on activities outside the normal business of a
company
Materiality - ANSWER-the question of whether an item is large enough to make any
difference to anyone
Net Assets - ANSWER-total assets minus total liabilities. In a sole proprietorship the
amount of net assets is reported as owner's equity. In a corporation the amount of net
assets is reported as stockholders' equity.
Net Income - ANSWER-the difference between revenues and expenses. If revenues
exceed expenses, net income results. If, on the other hand, expenses exceed revenues,
there will be a net loss
Net Loss - ANSWER-the difference between revenues and expenses. If revenues
exceed expenses, net income results. If, on the other hand, expenses exceed revenues,
there will be a net loss
Makers Questions and Answers ()
Accounting - ANSWER-A system of providing "quantitative information, primarily
financial in nature, about economic entities that is intended to be useful in making
economic decisions."
American Institute of Certified Public Accountants (AICPA) - ANSWER-The professional
organization of certified public accountants in the United States.
Balance Sheet - ANSWER-Document which reports the resources of a company (the
assets), the company's obligations (the liabilities), and the owners' equity, which
represents how much money has been invested in the company by its owners.
Bookkeeping - ANSWER-The preservation of a systematic, quantitative record of an
activity.
Certified Public Accountant - ANSWER-A person who has taken a minimum number of
college-level accounting classes, has passed the dreaded CPA exam, and has met
other requirements set by his or her state.
Financial Accounting - ANSWER-The name given to accounting information provided
for and used by external users.
Financial Accounting Standards Board (FASB) - ANSWER-Private, non-profit body that
sets accounting standards in the United States.
Financial Statements - ANSWER-The three primary financial information documents:
the balance sheet, income statement, and statement of cash flows.
Income Statement - ANSWER-This document reports the amount of net income earned
by a company during a period, with annual and quarterly income statements being the
most common.
Internal Revenue Service (IRS) - ANSWER-The government agency responsible for tax
collection and tax law enforcement.
International Accounting Standards Board (IASB) - ANSWER-An independent,
international body formed to develop worldwide accounting standards.
International Financial Reporting Standards (IFRS) - ANSWER-The accounting
standards produced by the IASB.
Managerial Accounting - ANSWER-The name given to accounting systems designed for
internal users.
,Public Company Accounting Oversight Board (PCAOB) - ANSWER-A private, non-profit
organization that effectively serves as an arm of the SEC in registering, inspecting, and
disciplining the auditors of all publicly traded companies.
Statement of Cash Flows - ANSWER-This document reports the amount of cash
collected and paid out by a company in the following three types of activities: operating,
investing, and financing.
Accounting Equation - ANSWER-Assets = Liabilities + Owners' Equity
Accumulated Other Comprehensive Income - ANSWER-The source of these increased
assets
Assets - ANSWER-Assets are the firm's economic resources, formally defined as
"probable future economic benefits obtained or controlled by a particular entity as a
result of past transactions or events
Balance Sheet - ANSWER-A statement of financial position shows the financial
resources the company owns or controls and the claims on those resources
Book Value - ANSWER-The book value of an asset is the asset's cost minus the asset's
accumulated depreciation.
Comparability - ANSWER-Information that becomes much more useful when it can be
related to a benchmark or standard
Conservatism - ANSWER-a pervasive factor in accounting, can be summarized as
follows: When in doubt, recognize all losses but don't recognize any gains.
Consistency - ANSWER-The consistency principle states that, once you adopt an
accounting principle or method, continue to follow it consistently in future accounting
periods.
Earnings Per Share (EPS) - ANSWER-EPS tells the owner of one share of stock what
he or she really wants to know
Entity Concept - ANSWER-The idea that personal financial activity is kept separate from
business financial activity
Expenses - ANSWER-The amount of assets consumed from the performance of
business operations and thus are the opposite of revenues
External Audit - ANSWER-audit conducted by external (independent) qualified
accountant(s)
, Financing Activities - ANSWER-Those activities whereby cash is obtained from, or
repaid to, owners and creditors
Gains - ANSWER-Refers to money made on activities outside the normal business of a
company
Going Concern Assumption - ANSWER-allows the readers of financial statements to
assume that the company will continue on long enough to carry out its objectives and
commitments.
Historical Cost Convention - ANSWER-An accounting technique that values an asset for
balance sheet purposes at the price paid for the asset at the time of its acquisition
Income Statement - ANSWER-A company's financial performance for a specified period
of time.
Investing Activities - ANSWER-The purchase and sale of land, buildings, and
equipment. Investing activities also include buying and selling stocks of other
companies
Liabilities - ANSWER-the future sacrifices of economic benefits that the entity is
presently obliged to make to other entities as a result of past transactions or other past
events
Liquidity - ANSWER-the ease with which the item can be turned into cash
Losses - ANSWER-Refers to money lost on activities outside the normal business of a
company
Materiality - ANSWER-the question of whether an item is large enough to make any
difference to anyone
Net Assets - ANSWER-total assets minus total liabilities. In a sole proprietorship the
amount of net assets is reported as owner's equity. In a corporation the amount of net
assets is reported as stockholders' equity.
Net Income - ANSWER-the difference between revenues and expenses. If revenues
exceed expenses, net income results. If, on the other hand, expenses exceed revenues,
there will be a net loss
Net Loss - ANSWER-the difference between revenues and expenses. If revenues
exceed expenses, net income results. If, on the other hand, expenses exceed revenues,
there will be a net loss
