D196 WGU Questions and Answers with Verified Solutions

D196 WGU Questions and Answers with Verified Solutions What is the role and purpose of accounting ? - Answer ️️ -Role: To help track income and expenditures, and to provide investors, management, and government with financial information. Purpose: To accumulate, measure, and communicate financial information about businesses and other organizations. · Who uses accounting information and why? - Answer ️️ -Potential investors and creditors use accounting information, but basically everyone uses accounting information. They use it to make internal and external business decisions. · What are the important influences on accounting? - Answer ️️ -Important influences on accounting is the development of the "generally accepted accounting principles"(GAAP), international business and ethical consideration. · What is the role of ethics in accounting? - Answer ️️ -Being an accountant requires honesty and integrity, as well as professional judgement. So having ethics in accounting is very important. What are the three main functions of accounting? - Answer ️️ -The 3 main functions of accounting are: Analyzing, Bookkeeping, and Evaluating(ABE). The Financial Accounting Standards Board(FASB) - Answer ️️ -An organization responsible for studying accounting issues and establishing standards a) Private group b) Public process c) Establishes GAAP The Governmental Accounting Standards Board(GASB) - Answer ️️ -A private, non governmental organization who sets accounting and financial reporting standards for state and local governments Securities and Exchange Commission(SEC) - Answer ️️ -Regulates stock exchanges a) Has legal authority to regulate financial markets and accounting b) Usually defers to the FASB on accounting matters The Public Company Accounting Oversight Board(PCAOB) - Answer ️️ -Oversees all accounting firms. Internal Revenue Service(IRS) - Answer ️️ -Collects and regulates income taxes International Accounting Standards Board(IASB) - Answer ️️ -The FASB of the world(except the USA) Assets - Answer ️️ -assets are what we OWN. Common Assets: -) Cash -) Accounts receivable -) Inventory -) Buildings -) Prepaid Liabilities - Answer ️️ -An obligation to pay cash, transfer other assets, or provide services to someone. A) Liabilities are what we OWE. B) Common Liabilities: -) Accounts Payable -) Taxes Payable -) Mortgage Payable -) Unearned Revenue Owners Equity - Answer ️️ -The owners share of earnings. A) Sources of equity: -) Capital/Common Stock -) Retained Earnings What is the Accounting Cycle and how does it work? - Answer ️️ -The accounting cycle is the procedure for analyzing, recording, summarizing, and preparing the transactions of a business. The accounting cycle works by turning transactions into financial statements through these steps: Step 1: Analyze Transactions Step 2: Record the effects of trans