Financial Accounting Chapter 1 Rutgers-Wasserman questions with answers

Financial Accounting Chapter 1 Rutgers- |\ |\ |\ |\




Wasserman questions with answers |\ |\ |\




Accounting - CORRECT ANSWERS ✔✔three activities:
|\ |\ |\ |\ |\ |\



identifies, records, and communicates the economic
|\ |\ |\ |\ |\ |\



events of an organization
|\ |\ |\




Internal users - CORRECT ANSWERS ✔✔managers,
|\ |\ |\ |\ |\ |\



supervisors, financial directors, etc. who use accounting
|\ |\ |\ |\ |\ |\ |\



data to plan, organize, and run business
|\ |\ |\ |\ |\ |\




Managerial Accounting - CORRECT ANSWERS ✔✔provides
|\ |\ |\ |\ |\ |\



internal reports to help users make decisions about their
|\ |\ |\ |\ |\ |\ |\ |\ |\



companies


External users - CORRECT ANSWERS ✔✔people and
|\ |\ |\ |\ |\ |\ |\



organizations outside a company who want financial |\ |\ |\ |\ |\ |\ |\



information about the company, ex investors and
|\ |\ |\ |\ |\ |\ |\



creditors


Investors (owners) - CORRECT ANSWERS ✔✔use financial
|\ |\ |\ |\ |\ |\ |\



information to decide whether to buy, hold, sell ownership
|\ |\ |\ |\ |\ |\ |\ |\



in company
|\ |\

, Creditors (ex suppliers/bankers) - CORRECT ANSWERS
|\ |\ |\ |\ |\ |\



✔✔use financial information to evaluate risks of granting
|\ |\ |\ |\ |\ |\ |\ |\



credit or lending money to company
|\ |\ |\ |\ |\




Sarbanes-Oxley Act (SOX) - CORRECT ANSWERS ✔✔intent |\ |\ |\ |\ |\ |\



to reduce unethical corporate behavior, top management
|\ |\ |\ |\ |\ |\ |\



must certify accuracy of financial info, more severe
|\ |\ |\ |\ |\ |\ |\ |\ |\



penalties, more oversight of board of directors|\ |\ |\ |\ |\ |\




Generally Accepted Accounting Principles (GAAP) -
|\ |\ |\ |\ |\ |\



CORRECT ANSWERS ✔✔general list of ethics that are
|\ |\ |\ |\ |\ |\ |\ |\



widely followed and accepted by accounting departments
|\ |\ |\ |\ |\ |\



in all companies
|\ |\ |\




Financial Accounting Standards Board (FASB) - CORRECT
|\ |\ |\ |\ |\ |\ |\



ANSWERS ✔✔primary accounting standard-setting body |\ |\ |\ |\ |\



in US|\




Securities Exchange Commission (SEC) - CORRECT |\ |\ |\ |\ |\ |\



ANSWERS ✔✔agency of US gov. that oversees financial |\ |\ |\ |\ |\ |\ |\ |\



markets and accounting standard-setting bodies, relies on
|\ |\ |\ |\ |\ |\



FASB to develop accounting standards that companies
|\ |\ |\ |\ |\ |\ |\ |\



must follow |\




International Accounting Standards Board (IASB) - |\ |\ |\ |\ |\ |\



CORRECT ANSWERS ✔✔many countries adopt standards
|\ |\ |\ |\ |\ |\