WGU C213 STUDY GUIDE 100%
SOLVED
,purpose of accounting - ANSWERSAccounting is the recording of the day-to-day
financial activities of a company and the organization of that information into summary
reports used to evaluate the company's financial status.
Bookkeeping is a part of accounting. Bookkeeping refers to the process of recording
transactions into various accounts, which is the first step in accounting. The next step is
to analyze the accounts and organize them into financial statements and other useful
reports. (Reference topic 1.1)
The balance sheet - ANSWERSreports a company's assets, liabilities, and owners'
equity. It reports the financial position of a firm at a point in time.
income statement - ANSWERSreports the amount of net income earned by a company
during a period. Net income is the excess of a company's revenues over its expenses. It
reports the financial performance of a firm over a period of time.
statement of cash flows - ANSWERSreports the amount of cash collected and paid out
by a company in the following three types of activities: operating, investing, and
financing over a period of time. (Reference topic 1.2)
Fin Statement Users: Lenders - ANSWERSBanks use companies' financial statements
in making decisions about commercial loans. The financial statements are useful
because they help the lender predict the future ability of the borrower to repay the loan.
Fin Statement Users: Investors - ANSWERSInvestors want information to help them
estimate how much cash they can expect to directly receive from the business in the
future if they invest in it now.
Fin Statement Users: Company Management - ANSWERSManagers use financial
accounting data to formulate company goals, to compute bonuses for employees, and
to illuminate company weaknesses.
Fin Statement Users: Suppliers and Customers - ANSWERSSuppliers, customers, and
employees use financial statements to tell them about the long-run prospects of a
company.
Fin Statement Users: Employees - ANSWERSFinancial statement data, as mentioned
earlier, are used in determining employee bonuses. In addition, financial accounting
information can help an employee evaluate the employer's ability to fulfill its long-run
promises, such as for pensions and retiree health care benefits. Financial statements
are also important in contract negotiations between labor and management.
, Fin Statement Users: Competitors - ANSWERSCompetitors use financial accounting
information to reveal strategic opportunities within their industry.
Government Agencies - ANSWERSGovernment agencies use financial statement data
to bolster political and regulatory positions for and against companies.
Fin Statement Users: The Press - ANSWERSReporters use financial accounting data
as background information and to indicate which companies are undergoing significant
changes in financial status. (Reference Topic 1.3)
Fin Statement Users: Politicians - ANSWERSPoliticians use financial statement data to
bolster political and regulatory positions for and against companies.
Acct Rules: Financial Accountings Standards Board (FASB) - ANSWERSsets
accounting rules for the private section in the U.S.. It is a private, non-profit body
established and supported by the joint efforts of the U.S. business community, financial
analysts, and practicing accountants.
The FASB has no legal power to enforce the accounting standards it sets but maintains
its influence by carefully protecting its prestige and reputation. The standards it sets are
called Generally Accepted Accounting Standards (GAAP). These are a common set of
accounting principles, standards, and procedures that companies must follow when they
compile their financial statements. (Reference Topic 1.4)
Acct Rules: Securities and Exchange Commission (SEC) - ANSWERShas the legal
authority to set accounting rules, but has deferred that responsibility to the FASB in
most cases. The SEC regulates U.S. stock exchanges and seeks to create a fair
information environment in which investors can buy and sell stocks without fear that
companies who sell stocks to the general public are hiding or manipulating financial
data. (Reference topic 1.5)
Acct Org: CPA Accreditation - ANSWERSThe American Institute of Certified Public
Accountants (AICPA) is the professional organization of certified public accountants
(CPAs) in the United States. A CPA is someone who has taken a minimum number of
college-level accounting classes, has passed the CPA exam, and has met other
requirements set by his or her state. A CPA firm is a company that provides freelance
business advice, particularly in connection with accounting issues and executes the vast
majority of external audits in the US.
The AICPA sets ethical standards for CPAs, provides continuing education for them,
writes and grades the CPA exam, lobbies for legislation favored by CPAs, and provides
other support to CPAs. Its oversight of the CPA exam is its main role in accreditation.
However, to be accredited as a CPA you must meet the requirements of the state in
which you plan to practice. The requirements for each state are set by that state's
legislature and overseen by that state's Board of Accountancy, which is a state agency.
(Reference Topic 1.5)
SOLVED
,purpose of accounting - ANSWERSAccounting is the recording of the day-to-day
financial activities of a company and the organization of that information into summary
reports used to evaluate the company's financial status.
Bookkeeping is a part of accounting. Bookkeeping refers to the process of recording
transactions into various accounts, which is the first step in accounting. The next step is
to analyze the accounts and organize them into financial statements and other useful
reports. (Reference topic 1.1)
The balance sheet - ANSWERSreports a company's assets, liabilities, and owners'
equity. It reports the financial position of a firm at a point in time.
income statement - ANSWERSreports the amount of net income earned by a company
during a period. Net income is the excess of a company's revenues over its expenses. It
reports the financial performance of a firm over a period of time.
statement of cash flows - ANSWERSreports the amount of cash collected and paid out
by a company in the following three types of activities: operating, investing, and
financing over a period of time. (Reference topic 1.2)
Fin Statement Users: Lenders - ANSWERSBanks use companies' financial statements
in making decisions about commercial loans. The financial statements are useful
because they help the lender predict the future ability of the borrower to repay the loan.
Fin Statement Users: Investors - ANSWERSInvestors want information to help them
estimate how much cash they can expect to directly receive from the business in the
future if they invest in it now.
Fin Statement Users: Company Management - ANSWERSManagers use financial
accounting data to formulate company goals, to compute bonuses for employees, and
to illuminate company weaknesses.
Fin Statement Users: Suppliers and Customers - ANSWERSSuppliers, customers, and
employees use financial statements to tell them about the long-run prospects of a
company.
Fin Statement Users: Employees - ANSWERSFinancial statement data, as mentioned
earlier, are used in determining employee bonuses. In addition, financial accounting
information can help an employee evaluate the employer's ability to fulfill its long-run
promises, such as for pensions and retiree health care benefits. Financial statements
are also important in contract negotiations between labor and management.
, Fin Statement Users: Competitors - ANSWERSCompetitors use financial accounting
information to reveal strategic opportunities within their industry.
Government Agencies - ANSWERSGovernment agencies use financial statement data
to bolster political and regulatory positions for and against companies.
Fin Statement Users: The Press - ANSWERSReporters use financial accounting data
as background information and to indicate which companies are undergoing significant
changes in financial status. (Reference Topic 1.3)
Fin Statement Users: Politicians - ANSWERSPoliticians use financial statement data to
bolster political and regulatory positions for and against companies.
Acct Rules: Financial Accountings Standards Board (FASB) - ANSWERSsets
accounting rules for the private section in the U.S.. It is a private, non-profit body
established and supported by the joint efforts of the U.S. business community, financial
analysts, and practicing accountants.
The FASB has no legal power to enforce the accounting standards it sets but maintains
its influence by carefully protecting its prestige and reputation. The standards it sets are
called Generally Accepted Accounting Standards (GAAP). These are a common set of
accounting principles, standards, and procedures that companies must follow when they
compile their financial statements. (Reference Topic 1.4)
Acct Rules: Securities and Exchange Commission (SEC) - ANSWERShas the legal
authority to set accounting rules, but has deferred that responsibility to the FASB in
most cases. The SEC regulates U.S. stock exchanges and seeks to create a fair
information environment in which investors can buy and sell stocks without fear that
companies who sell stocks to the general public are hiding or manipulating financial
data. (Reference topic 1.5)
Acct Org: CPA Accreditation - ANSWERSThe American Institute of Certified Public
Accountants (AICPA) is the professional organization of certified public accountants
(CPAs) in the United States. A CPA is someone who has taken a minimum number of
college-level accounting classes, has passed the CPA exam, and has met other
requirements set by his or her state. A CPA firm is a company that provides freelance
business advice, particularly in connection with accounting issues and executes the vast
majority of external audits in the US.
The AICPA sets ethical standards for CPAs, provides continuing education for them,
writes and grades the CPA exam, lobbies for legislation favored by CPAs, and provides
other support to CPAs. Its oversight of the CPA exam is its main role in accreditation.
However, to be accredited as a CPA you must meet the requirements of the state in
which you plan to practice. The requirements for each state are set by that state's
legislature and overseen by that state's Board of Accountancy, which is a state agency.
(Reference Topic 1.5)
