ACG 5026 EXAM 1 QUESTION AND ANSWERS
Explain the report step in the accounting cycle - Answers - Step 4 - After adjustments
are made, the financial statements are prepared
- Income statement, balance sheet, statement of cash flows, and statement of equity
-At the end of the accounting period
Net income _____ retained earnings and dividends _____ retained earnings - Answers -
Increae, decrease
assign rating to macys debt, which indicates the chance of default - Answers - Financial
analysts
to determine whether to lend money to maycys over 10 year period - Answers -
Creditors
to estimate your year end bonus based on macys financial results - Answers -
Managers
to verify the amount of sales taxes due from macys - Answers - Government agencies
to aid in the decision of whether to buy additional sharesd of macys stock - Answers -
Shareholders
as input in a decision to contractually sell a sepcified quantity of items at a set price to
macys over the next two years - Answers - Suppliers
process of identifying, measuring, and communicating financial info to help people make
economic decisions - Answers - Accounting
Accounting for decision makers OUTSIDE of the company - Answers - Finanical
accoutning
Accounting for decision makers within of the company - Answers - Managerial
accounting
Who is interested in the potential borrowers ability to repay - Answers - creditors
establish credit sales terms and determine long term commitment to supply chain
relationships - Answers - Suppliers
act of providing financial info to external users - Answers - Disclosure
, 4 types of business activties - Answers - Planning - goals and strategies to reach goals
Investing - acquiring and disposing of the resources needed to produce and sell a
company's products and services (ASSETS)
Financing - the methods companies use to fund the investments (LIABILITIES)
Operating - o production, promotion, and selling of a company's products and services
(REVENUE AND EXPENSES)
Lists the company's investments and sources of financing using the accounting
equation - Answers - Balance sheet
eport the results of operations - Answers - Income Statement
o details changes in owner financing - Answers - Statement of stockholder equity
details the sources and uses of cash - Answers - Statement of cash flows
3 linkages of the financial statements - Answers - 1. Statement of Cash flows links the
cash in the balance sheet
2. Income statement links the retained earnings in the statement of stockholder equity
3. Statement of stockholder equity links the equity in the balance sheet
set of standard and accepted practices designed to guide the preparation of financial
statements - Answers - Generally Accepted Accounting Principles (GAAP)
ultimate authority over financial reporting and to regulate issuance and trading of
securities - Answers - Securities and exchange commission (SEC)
setting accounting standards and created the FSAB - Answers - American Institute of
Certified Public Accountants (AICPA)
Codifies new accounting standards that guide financial reporting - Answers - Financial
Accounting Standards Board (FASB)
goal to increase the level of confidence that external users (investors) have in financial
statements. Also created the PCAOB - Answers - Sarbanes Onley Act
approves auditing standards and monitor the quality of the financial statements and
audits - Answers - Public Company Accounting Oversight Board (PCAOB)
whether a particular amount is large enough to affect a decision. - Answers - Materiality
presented so knowledgeable reader can understand how it relates to the decision
process - Answers - Understandability
ability to make a difference in decision and influence the decisions - Answers -
Relevance
Explain the report step in the accounting cycle - Answers - Step 4 - After adjustments
are made, the financial statements are prepared
- Income statement, balance sheet, statement of cash flows, and statement of equity
-At the end of the accounting period
Net income _____ retained earnings and dividends _____ retained earnings - Answers -
Increae, decrease
assign rating to macys debt, which indicates the chance of default - Answers - Financial
analysts
to determine whether to lend money to maycys over 10 year period - Answers -
Creditors
to estimate your year end bonus based on macys financial results - Answers -
Managers
to verify the amount of sales taxes due from macys - Answers - Government agencies
to aid in the decision of whether to buy additional sharesd of macys stock - Answers -
Shareholders
as input in a decision to contractually sell a sepcified quantity of items at a set price to
macys over the next two years - Answers - Suppliers
process of identifying, measuring, and communicating financial info to help people make
economic decisions - Answers - Accounting
Accounting for decision makers OUTSIDE of the company - Answers - Finanical
accoutning
Accounting for decision makers within of the company - Answers - Managerial
accounting
Who is interested in the potential borrowers ability to repay - Answers - creditors
establish credit sales terms and determine long term commitment to supply chain
relationships - Answers - Suppliers
act of providing financial info to external users - Answers - Disclosure
, 4 types of business activties - Answers - Planning - goals and strategies to reach goals
Investing - acquiring and disposing of the resources needed to produce and sell a
company's products and services (ASSETS)
Financing - the methods companies use to fund the investments (LIABILITIES)
Operating - o production, promotion, and selling of a company's products and services
(REVENUE AND EXPENSES)
Lists the company's investments and sources of financing using the accounting
equation - Answers - Balance sheet
eport the results of operations - Answers - Income Statement
o details changes in owner financing - Answers - Statement of stockholder equity
details the sources and uses of cash - Answers - Statement of cash flows
3 linkages of the financial statements - Answers - 1. Statement of Cash flows links the
cash in the balance sheet
2. Income statement links the retained earnings in the statement of stockholder equity
3. Statement of stockholder equity links the equity in the balance sheet
set of standard and accepted practices designed to guide the preparation of financial
statements - Answers - Generally Accepted Accounting Principles (GAAP)
ultimate authority over financial reporting and to regulate issuance and trading of
securities - Answers - Securities and exchange commission (SEC)
setting accounting standards and created the FSAB - Answers - American Institute of
Certified Public Accountants (AICPA)
Codifies new accounting standards that guide financial reporting - Answers - Financial
Accounting Standards Board (FASB)
goal to increase the level of confidence that external users (investors) have in financial
statements. Also created the PCAOB - Answers - Sarbanes Onley Act
approves auditing standards and monitor the quality of the financial statements and
audits - Answers - Public Company Accounting Oversight Board (PCAOB)
whether a particular amount is large enough to affect a decision. - Answers - Materiality
presented so knowledgeable reader can understand how it relates to the decision
process - Answers - Understandability
ability to make a difference in decision and influence the decisions - Answers -
Relevance
