MGT 8803 - Accounting -
Module 1 Comprehensive
Questions with Verified
Answers Graded A+
What are the three forms of business? - Answer: Proprietorship, partnership, and corporations
A proprietorship/partnership has limited liability? - Answer: False
What are the accounting assumptions? - Answer: Separate entity, consistent unit of
measurement (currency), going concern, periodicity, and materiality
Materiality - Answer: only information that would influence the decisions of a reliant party need
be disclosed
Periodicity - Answer: presume arbitrarily picked time period and repeat financial results of that
time
Going Concern - Answer: the presumption that the entity will continue to operate in the future
Who uses financial statements? - Answer: investors, creditors, financial analysts, gov't agencies
, GAAP - Answer: Generally Accepted Accounting Principles. The standards and rules that
accountants follow while recording and reporting financial activities.
Financial Accounting Standards Board (FASB) - Answer: the private board that establishes the
generally accepted accounting principles used in the practice of financial accounting
IFRS (International Financial Reporting Standards) - Answer: A standardized set of rules and
practices in business accounting used in many countries as an alternative to US GAAP.
What are the qualities of financial statements? - Answer: Understandability, timeliness, full
disclosure, comparability, objectivity, decision relevance
Full Disclosure Principle - Answer: requires that companies disclose all circumstances and events
that would make a difference to financial statement users
What are the three types of financial statements? (gone over so far) - Answer: Balance sheet,
income statement, statement of cash flows
Why is accuracy not a quality of a financial statement? - Answer: Too much judgment is involved
Which quality of financial statements conflicts with objectivity? - Answer: Decision relevance
What are the three categories of a balance sheet? - Answer: assets, liabilities, and owner's
equity
What is the accounting equation? - Answer: Assets = Liabilities + Owner's Equity
Accounting equation details - what is the left side? - Answer: resources available
Module 1 Comprehensive
Questions with Verified
Answers Graded A+
What are the three forms of business? - Answer: Proprietorship, partnership, and corporations
A proprietorship/partnership has limited liability? - Answer: False
What are the accounting assumptions? - Answer: Separate entity, consistent unit of
measurement (currency), going concern, periodicity, and materiality
Materiality - Answer: only information that would influence the decisions of a reliant party need
be disclosed
Periodicity - Answer: presume arbitrarily picked time period and repeat financial results of that
time
Going Concern - Answer: the presumption that the entity will continue to operate in the future
Who uses financial statements? - Answer: investors, creditors, financial analysts, gov't agencies
, GAAP - Answer: Generally Accepted Accounting Principles. The standards and rules that
accountants follow while recording and reporting financial activities.
Financial Accounting Standards Board (FASB) - Answer: the private board that establishes the
generally accepted accounting principles used in the practice of financial accounting
IFRS (International Financial Reporting Standards) - Answer: A standardized set of rules and
practices in business accounting used in many countries as an alternative to US GAAP.
What are the qualities of financial statements? - Answer: Understandability, timeliness, full
disclosure, comparability, objectivity, decision relevance
Full Disclosure Principle - Answer: requires that companies disclose all circumstances and events
that would make a difference to financial statement users
What are the three types of financial statements? (gone over so far) - Answer: Balance sheet,
income statement, statement of cash flows
Why is accuracy not a quality of a financial statement? - Answer: Too much judgment is involved
Which quality of financial statements conflicts with objectivity? - Answer: Decision relevance
What are the three categories of a balance sheet? - Answer: assets, liabilities, and owner's
equity
What is the accounting equation? - Answer: Assets = Liabilities + Owner's Equity
Accounting equation details - what is the left side? - Answer: resources available
