WGU C213 STUDY GUIDE| 112 ACTUAL GOOD VERIFIED
ANSWERS|| GRADED A+
1. purpose of accounting ANS Accounting is the recording of the day-to-day
financial activities of a company and the organization of that information into
summary reports used to evaluate the company's financial status.
Bookkeeping is a part of accounting. Bookkeeping refers to the process of recording
transactions into various accounts, which is the first step in accounting. The next
step is to analyze the accounts and organize them into financial statements and
other useful reports. (Reference topic 1.1)
2. The balance sheet ANS reports a company's assets, liabilities, and owners'
equity. It reports the financial position of a firm at a point in time.
3. income statement ANS reports the amount of net income earned by a company
dur- ing a period. Net income is the excess of a company's revenues over its
expenses. It reports the financial performance of a firm over a period of time.
4. statement of cash flows ANS reports the amount of cash collected and paid out
by a company in the following three types of activities ANS operating, investing, and
financing over a period of time. (Reference topic 1.2)
5. Fin Statement Users ANS Lenders ANS Banks use companies' financial
statements in making decisions about commercial loans. The financial
statements are useful because they help the lender predict the future ability of the
borrower to repay the loan.
6. Fin Statement Users ANS Investors ANS Investors want information to help
them esti- mate how much cash they can expect to directly receive from the
business in the future if they invest in it now.
7. Fin Statement Users ANS Company Management ANS Managers use
financial ac- counting data to formulate company goals, to compute bonuses for
,employees, and to illuminate company weaknesses.
8. Fin Statement Users ANS Suppliers and Customers ANS Suppliers,
customers, and employees use financial statements to tell them about the long-
run prospects of a company.
9. Fin Statement Users ANS Employees ANS Financial statement data, as
mentioned ear- lier, are used in determining employee bonuses. In addition,
financial accounting information can help an employee evaluate the employer's
ability to fulfill its long-run promises, such as for pensions and retiree health care
benefits. Financial statements are also important in contract negotiations between
labor and management.
10. Fin Statement Users ANS Competitors ANS Competitors use financial
accounting in- formation to reveal strategic opportunities within their industry.
11. Government Agencies ANS Government agencies use financial statement
data to bolster political and regulatory positions for and against companies.
,12. Fin Statement Users ANS The Press ANS Reporters use financial
accounting data as background information and to indicate which companies are
undergoing significant changes in financial status. (Reference Topic 1.3)
13. Fin Statement Users ANS Politicians ANS Politicians use financial
statement data to bolster political and regulatory positions for and against
companies.
14. Acct Rules ANS Financial Accountings Standards Board (FASB) ANS
sets account- ing rules for the private section in the U.S.. It is a private, non-profit
body established and supported by the joint efforts of the U.S. business community,
financial analysts, and practicing accountants.
The FASB has no legal power to enforce the accounting standards it sets but main-
tains its influence by carefully protecting its prestige and reputation. The standards
it sets are called Generally Accepted Accounting Standards (GAAP). These are a
common set of accounting principles, standards, and procedures that companies
must follow when they compile their financial statements. (Reference Topic 1.4)
15. Acct Rules ANS Securities and Exchange Commission (SEC) ANS has
the legal authority to set accounting rules, but has deferred that responsibility to
the FASB in most cases. The SEC regulates U.S. stock exchanges and seeks to
create a fair information environment in which investors can buy and sell stocks
without fear that companies who sell stocks to the general public are hiding or
manipulating financial data. (Reference topic 1.5)
16. Acct Org ANS CPA Accreditation ANS The American Institute of Certified
Public Ac- countants (AICPA) is the professional organization of certified public
accountants (CPAs) in the United States. A CPA is someone who has taken a
minimum number of college-level accounting classes, has passed the CPA exam,
and has met other requirements set by his or her state. A CPA firm is a company that
provides freelance business advice, particularly in connection with accounting
issues and executes the vast majority of external audits in the US.
The AICPA sets ethical standards for CPAs, provides continuing education for them,
writes and grades the CPA exam, lobbies for legislation favored by CPAs, and
provides other support to CPAs. Its oversight of the CPA exam is its main role in
accreditation. However, to be accredited as a CPA you must meet the requirements
of the state in which you plan to practice. The requirements for each state are set by
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, that state's legislature and overseen by that state's Board of Accountancy, which is
a state agency. (Reference Topic 1.5)
V V V V V
17. Acct Org ANS Public Company Accounting Oversight Board (PCAOB)
V V VV V V V V V
ANS deter- mines who can audit public companies regardless of whether the
V VV V V V V V V V V V V
audit firm is accredited by a state Board of Accountancy. Thus, they accredit firms
V V V V V V V V V V V V V V
that can audit public companies.
V V V V V
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ANSWERS|| GRADED A+
1. purpose of accounting ANS Accounting is the recording of the day-to-day
financial activities of a company and the organization of that information into
summary reports used to evaluate the company's financial status.
Bookkeeping is a part of accounting. Bookkeeping refers to the process of recording
transactions into various accounts, which is the first step in accounting. The next
step is to analyze the accounts and organize them into financial statements and
other useful reports. (Reference topic 1.1)
2. The balance sheet ANS reports a company's assets, liabilities, and owners'
equity. It reports the financial position of a firm at a point in time.
3. income statement ANS reports the amount of net income earned by a company
dur- ing a period. Net income is the excess of a company's revenues over its
expenses. It reports the financial performance of a firm over a period of time.
4. statement of cash flows ANS reports the amount of cash collected and paid out
by a company in the following three types of activities ANS operating, investing, and
financing over a period of time. (Reference topic 1.2)
5. Fin Statement Users ANS Lenders ANS Banks use companies' financial
statements in making decisions about commercial loans. The financial
statements are useful because they help the lender predict the future ability of the
borrower to repay the loan.
6. Fin Statement Users ANS Investors ANS Investors want information to help
them esti- mate how much cash they can expect to directly receive from the
business in the future if they invest in it now.
7. Fin Statement Users ANS Company Management ANS Managers use
financial ac- counting data to formulate company goals, to compute bonuses for
,employees, and to illuminate company weaknesses.
8. Fin Statement Users ANS Suppliers and Customers ANS Suppliers,
customers, and employees use financial statements to tell them about the long-
run prospects of a company.
9. Fin Statement Users ANS Employees ANS Financial statement data, as
mentioned ear- lier, are used in determining employee bonuses. In addition,
financial accounting information can help an employee evaluate the employer's
ability to fulfill its long-run promises, such as for pensions and retiree health care
benefits. Financial statements are also important in contract negotiations between
labor and management.
10. Fin Statement Users ANS Competitors ANS Competitors use financial
accounting in- formation to reveal strategic opportunities within their industry.
11. Government Agencies ANS Government agencies use financial statement
data to bolster political and regulatory positions for and against companies.
,12. Fin Statement Users ANS The Press ANS Reporters use financial
accounting data as background information and to indicate which companies are
undergoing significant changes in financial status. (Reference Topic 1.3)
13. Fin Statement Users ANS Politicians ANS Politicians use financial
statement data to bolster political and regulatory positions for and against
companies.
14. Acct Rules ANS Financial Accountings Standards Board (FASB) ANS
sets account- ing rules for the private section in the U.S.. It is a private, non-profit
body established and supported by the joint efforts of the U.S. business community,
financial analysts, and practicing accountants.
The FASB has no legal power to enforce the accounting standards it sets but main-
tains its influence by carefully protecting its prestige and reputation. The standards
it sets are called Generally Accepted Accounting Standards (GAAP). These are a
common set of accounting principles, standards, and procedures that companies
must follow when they compile their financial statements. (Reference Topic 1.4)
15. Acct Rules ANS Securities and Exchange Commission (SEC) ANS has
the legal authority to set accounting rules, but has deferred that responsibility to
the FASB in most cases. The SEC regulates U.S. stock exchanges and seeks to
create a fair information environment in which investors can buy and sell stocks
without fear that companies who sell stocks to the general public are hiding or
manipulating financial data. (Reference topic 1.5)
16. Acct Org ANS CPA Accreditation ANS The American Institute of Certified
Public Ac- countants (AICPA) is the professional organization of certified public
accountants (CPAs) in the United States. A CPA is someone who has taken a
minimum number of college-level accounting classes, has passed the CPA exam,
and has met other requirements set by his or her state. A CPA firm is a company that
provides freelance business advice, particularly in connection with accounting
issues and executes the vast majority of external audits in the US.
The AICPA sets ethical standards for CPAs, provides continuing education for them,
writes and grades the CPA exam, lobbies for legislation favored by CPAs, and
provides other support to CPAs. Its oversight of the CPA exam is its main role in
accreditation. However, to be accredited as a CPA you must meet the requirements
of the state in which you plan to practice. The requirements for each state are set by
3 V/ V37
, that state's legislature and overseen by that state's Board of Accountancy, which is
a state agency. (Reference Topic 1.5)
V V V V V
17. Acct Org ANS Public Company Accounting Oversight Board (PCAOB)
V V VV V V V V V
ANS deter- mines who can audit public companies regardless of whether the
V VV V V V V V V V V V V
audit firm is accredited by a state Board of Accountancy. Thus, they accredit firms
V V V V V V V V V V V V V V
that can audit public companies.
V V V V V
4 V/ V37
