MGT 8803 Financial
Accounting Comprehensive
Questions with Verified
Answers Graded A+
Proprietorship - Answer: Single Owner; unlimited liability & no taxation
Partnership - Answer: More than one owner; unlimited liability & no taxation
Corporation - Answer: A business owned by stockholders (shareholders -> board of directors -->
top managers); limited liability & taxation
Publicly traded or privately held
Assumptions of Financial Accounting - Answer: Separate entity, unit of measurement, going
concern, periodicity, materiality
Going Concern - Answer: Presume that the company will continue to operate & that it will be
ongoing
Periodicity - Answer: Presume that we can arbitrarily pick any time period that we want to and
report the financial results for that time period
, Materiality - Answer: only information that would influence the decisions of a reasonable
person need be disclosed
Users of Financial Reports - Answer: Investors (Stockholders), Creditors (Banks), Government
agencies (SEC), Company management, financial analysts
GAAP - Answer: Generally Accepted Accounting Principles. The standards and rules that
accountants follow while recording and reporting financial activities.
SEC - Answer: Securities and Exchange Commission; rule making resides under their authority
IFRS - Answer: International Financial Reporting Standards
GAAP vs Tax accounting - Answer: tax accounting is done for the IRS
Qualities of Financial Statements - Answer: Understandability, timeliness, full disclosure,
comparability, objectivity, decision relevance
Balance sheet - Answer: measures financial position at a point in time; Assets = Liabilities +
Owners Equity
Accounting equation - Answer: Assets = Liabilities + Owner's Equity
Assets - Answer: Resources of the company; resources owned or rights to receive resources
Liabilities - Answer: Sources of funding provided by the creditors; creditors claims
Owners' Equity - Answer: sources provided by the owners; owner's claims
Accounting Comprehensive
Questions with Verified
Answers Graded A+
Proprietorship - Answer: Single Owner; unlimited liability & no taxation
Partnership - Answer: More than one owner; unlimited liability & no taxation
Corporation - Answer: A business owned by stockholders (shareholders -> board of directors -->
top managers); limited liability & taxation
Publicly traded or privately held
Assumptions of Financial Accounting - Answer: Separate entity, unit of measurement, going
concern, periodicity, materiality
Going Concern - Answer: Presume that the company will continue to operate & that it will be
ongoing
Periodicity - Answer: Presume that we can arbitrarily pick any time period that we want to and
report the financial results for that time period
, Materiality - Answer: only information that would influence the decisions of a reasonable
person need be disclosed
Users of Financial Reports - Answer: Investors (Stockholders), Creditors (Banks), Government
agencies (SEC), Company management, financial analysts
GAAP - Answer: Generally Accepted Accounting Principles. The standards and rules that
accountants follow while recording and reporting financial activities.
SEC - Answer: Securities and Exchange Commission; rule making resides under their authority
IFRS - Answer: International Financial Reporting Standards
GAAP vs Tax accounting - Answer: tax accounting is done for the IRS
Qualities of Financial Statements - Answer: Understandability, timeliness, full disclosure,
comparability, objectivity, decision relevance
Balance sheet - Answer: measures financial position at a point in time; Assets = Liabilities +
Owners Equity
Accounting equation - Answer: Assets = Liabilities + Owner's Equity
Assets - Answer: Resources of the company; resources owned or rights to receive resources
Liabilities - Answer: Sources of funding provided by the creditors; creditors claims
Owners' Equity - Answer: sources provided by the owners; owner's claims
