BUSN 70 - Chapter 14 Test Questions and Answers Fully Solved Latest Update 2025-2026
Accounting - AnswersThe recording, measurement and interpretation of financial information
Certified Public Accountant (CPA) - AnswersAn individual who has been state certified to provide
accounting services ranging from the preparation of financial records and the filing of tax returns to
complex audits of corporate financial records
-Most CPAs are self-employed or members of large public accounting firms
Sarbanes-Oxley Act - Answersrequired firms to be more rigorous in their accounting and reporting
practices
-After the accounting scandals of Enron and Worldcom in the early 2000's, Congress passed this
Dodd Frank Act - Answersstrengthens the oversight of financial institutions
-During the latest financial crisis, banks developed questionable lending practices, leading to this
Forensic accounting - Answers-fit for legal review
-Involves analyzing financial documents in search of fraudulent entries or financial misconduct, in other
words "cooked books"
Private Accountants - AnswersEmployed by large corporations, government agencies, and other
organizations to prepare and analyze their financial statements
-Deeply involved in most of the important financial decisions of the organization
Certified Management Accountants (CMAs) - AnswersPrivate accountants who, after rigorous
examination, are certified by the National Association of Accountants and who have some managerial
responsibility
Bookkeeping - Answers-much narrower and more mechanical than accounting; limited to routine
recording of business transactions
-obtain and record the information used by accountants; requires less training
Accountants - Answershave more training allowing them to understand, interpret and analyze financial
information
Managerial Accounting - AnswersThe internal use of accounting statements by managers in planning
and directing the organization's activities
Cash Flow - AnswersThe movement of money through an organization over a daily, weekly, monthly or
yearly basis
-Perhaps management's single greatest concern is:
, Budget - AnswersAn internal financial plan that forecasts expenses and income over a set period of time
-Managerial accountants help prepare this
-The principal value of budgets lies in the breakdown of cash inflows and outflows
accounting statements - Answers-Managers use accounting statements to report to outsiders
-Used for filing income taxes, obtaining credit and reporting results to stockholders
Audited financial statements - Answersare those signed off on by a certified public accountant
The Accounting Equation - AnswersAssets = Liabilities + Owner's Equity
Assets - AnswersA firm's economic resources, or items of value that it owns, such as cash, inventory,
land, equipment, buildings, and other tangible and intangible things
Short term assets - Answersanything that can be turned into cash after a year, always at the top of
financial statement, wall street pays attention to this
Long term assets - Answersasset that will take longer than a year to liquidate it into cash, like land
Liabilities - AnswersDebts that a firm owes to others
Not all debt is bad to a company
-Interest you pay on a debt is a write off
Owners' Equity - AnswersEquals assets minus liabilities and reflects historical values
Double-Entry Bookkeeping - AnswersA system of recording and classifying business transactions that
maintains the balance of the accounting equation
Balance - AnswersTo keep the accounting equation in balance, each transaction must be recorded in two
separate accounts
Classification - AnswersAll business transactions are classified as either assets, liabilities, or owner's
equity
Break Down - AnswersMost organizations further break down these accounts, such as assets may be
broken down into cash, inventory and equipment
Accounting Cycle - AnswersThe four-step procedure of an accounting system:
1)examining source documents, 2)recording transactions in an accounting journal,
3) posting recorded transactions
4) preparing financial statements
Accounting - AnswersThe recording, measurement and interpretation of financial information
Certified Public Accountant (CPA) - AnswersAn individual who has been state certified to provide
accounting services ranging from the preparation of financial records and the filing of tax returns to
complex audits of corporate financial records
-Most CPAs are self-employed or members of large public accounting firms
Sarbanes-Oxley Act - Answersrequired firms to be more rigorous in their accounting and reporting
practices
-After the accounting scandals of Enron and Worldcom in the early 2000's, Congress passed this
Dodd Frank Act - Answersstrengthens the oversight of financial institutions
-During the latest financial crisis, banks developed questionable lending practices, leading to this
Forensic accounting - Answers-fit for legal review
-Involves analyzing financial documents in search of fraudulent entries or financial misconduct, in other
words "cooked books"
Private Accountants - AnswersEmployed by large corporations, government agencies, and other
organizations to prepare and analyze their financial statements
-Deeply involved in most of the important financial decisions of the organization
Certified Management Accountants (CMAs) - AnswersPrivate accountants who, after rigorous
examination, are certified by the National Association of Accountants and who have some managerial
responsibility
Bookkeeping - Answers-much narrower and more mechanical than accounting; limited to routine
recording of business transactions
-obtain and record the information used by accountants; requires less training
Accountants - Answershave more training allowing them to understand, interpret and analyze financial
information
Managerial Accounting - AnswersThe internal use of accounting statements by managers in planning
and directing the organization's activities
Cash Flow - AnswersThe movement of money through an organization over a daily, weekly, monthly or
yearly basis
-Perhaps management's single greatest concern is:
, Budget - AnswersAn internal financial plan that forecasts expenses and income over a set period of time
-Managerial accountants help prepare this
-The principal value of budgets lies in the breakdown of cash inflows and outflows
accounting statements - Answers-Managers use accounting statements to report to outsiders
-Used for filing income taxes, obtaining credit and reporting results to stockholders
Audited financial statements - Answersare those signed off on by a certified public accountant
The Accounting Equation - AnswersAssets = Liabilities + Owner's Equity
Assets - AnswersA firm's economic resources, or items of value that it owns, such as cash, inventory,
land, equipment, buildings, and other tangible and intangible things
Short term assets - Answersanything that can be turned into cash after a year, always at the top of
financial statement, wall street pays attention to this
Long term assets - Answersasset that will take longer than a year to liquidate it into cash, like land
Liabilities - AnswersDebts that a firm owes to others
Not all debt is bad to a company
-Interest you pay on a debt is a write off
Owners' Equity - AnswersEquals assets minus liabilities and reflects historical values
Double-Entry Bookkeeping - AnswersA system of recording and classifying business transactions that
maintains the balance of the accounting equation
Balance - AnswersTo keep the accounting equation in balance, each transaction must be recorded in two
separate accounts
Classification - AnswersAll business transactions are classified as either assets, liabilities, or owner's
equity
Break Down - AnswersMost organizations further break down these accounts, such as assets may be
broken down into cash, inventory and equipment
Accounting Cycle - AnswersThe four-step procedure of an accounting system:
1)examining source documents, 2)recording transactions in an accounting journal,
3) posting recorded transactions
4) preparing financial statements
