Intermediate Accounting 1 Test 1

Front 1

What is the process of identifying, measuring, recording, and communicating business activities?

Back 1

Accounting

Front 2

What is the purpose of accounting?

Back 2

To help people make decisions about economic activities

Front 3

What are within the primary markets?

Back 3

Investors and Financial Institutions; corporations

Front 4

What are within the secondary markets?

Back 4

Corporation not involved; just between buyers and sellers

Front 5

What helps facilitate capital allocation?

Back 5

Accounting Information

Front 6

What are the primary, external users of accounting information?

Back 6

Actual or potential Investors (stockholders and bondholders
Creditors (suppliers and lending institutions)
Other external users (financial analysts, advisors, brokers, underwriters, stock exchanges, taxing and regulatory authorities, labor unions, etc...)

Front 7

What are internal users of accounting information?

Back 7

Company managers

Front 8

What are the two branches of accounting?

Back 8

Financial and Managerial

Front 9

What is the process of communicating financial accounting information about a company to external users?

Back 9

Financial Reporting

Front 10

What all statements are included in annual report?

Back 10

Balance Sheet, Income Statement, Statement of Cash Flows, Statement of changes in stockholders' equity and notes to the financial statements

Front 11

What summarizes a company's financial position at a given date or statement of financial position?

Back 11

Balance Sheet

Front 12

What summarizes the results of a company's income producing activities for a period of time?

Back 12

Income Statement

Front 13

What summarizes a company's cash inflows and outflows for a period of time?

Back 13

Statement of Cash Flows

Front 14

What summarizes the changes in each item of stockholders' equity for a period of time?

Back 14

Statement of changes in stockholders' equity

Front 15

What are the guidelines, procedures, and practices that a company is required to use in recording and reporting the accounting information in its audited financial statements?

Back 15

Generally Accepted Accounting Principles (GAAP)

Front 16

What define accepted accounting practices and provide a standard by which to report financial results?

Back 16

GAAP

Front 17

What was replaced by SFAS 168 and Codification Project in 2009. The new codification reorganizes this into about 90 topical areas?

Back 17

GAAP Hierarchy

Front 18

Who was the first issued series of 51 Accounting Research Bulletins by for accounting standards (1938-1959)?

Back 18

AICPA's Committee on Accounting Procedure

Front 19

Who was the second board to issue a series of 31 opinions on accounting standards?

Back 19

AICPA's Accounting Principles Board

Front 20

Who is the present accounting standards board and issued Statements of Financial Accounting Standards; 168 of these standards?

Back 20

Financial Accounting Standards Board

Front 21

What does FASB issue now for standards?

Back 21

Accounting Standards Updates (ASUs)

Front 22

How many members did FASB originally consist of?
Have now?

Back 22

7 now 5

Front 23

How many members did APB consist of?

Back 23

18

Front 24

Which members are well paid (currently $550,000), fulltime, appointed for renewable 5 year terms?

Back 24

FASB

Front 25

Which members were volunteers and worked parttime?

Back 25

APB

Front 26

Who was senior committee of the AICPA?

Back 26

APB

Front 27

Who is not part of any single professional organization?

Back 27

FASB

Front 28

What members retained their private positions?

Back 28

APB

Front 29

What members must sever all ties?

Back 29

FASB

Front 30

All of these members were required to be CPAs?

Back 30

APB

Front 31

What members are not required to be CPAs?

Back 31

FASB

Front 32

What standards board takes care of timely, urgent issues?

Back 32

EITF

Front 33

How do we get new accounting rules (FASB's Due Process) 11 Steps?

Back 33

Identify Topic, Appoint Task Force, Conduct Research, Issue Preliminary Views or Invitation to Comment, Hold Public Hearings, Deliberate on Findings, Issue Exposure Draft, Hold Public Hearings, Modify Exposure Draft, Vote (Simply Majority), and Issue Statement

Front 34

What are not created in a vacuum and may not be "ideal"?

Back 34

Accounting Standards

Front 35

Who delegates its legal authority (granted by Congress) to set GAAP to the FASB?

Back 35

Securities and Exchange Commission (SEC)

Front 36

What are the SEC reporting requirements?

Back 36

Form S-1 (registration statements), Form 10-K (annual reports), Form 10-Q (quarterly reports), Form 8-K (disclosures of significant events), Proxy statements (Form DEF 14A), Insider holdings and trading activity(Forms 3,4, &5)

Front 37

What is a report used to describe any significant events that may effect the company (e.g., CEO fired)?

Back 37

Form 8-K

Front 38

What is a report used when management requests the right to vote through proxies for shareholders at stockholders' meetings?

Back 38

Proxy statement

Front 39

What is the professional organization for all certified public accountants in the United States?

Back 39

American Institute of Certified Public Accountants (AICPA)

Front 40

What was established in 1984 as a response by the FASB to criticisms that the Board did not always provide timely guidance on new accounting issues?

Back 40

Emerging Issues Task Force (EITF)

Front 41

What administers the Internal Revenue Code enacted by Congress?

Back 41

Internal Revenue Service

Front 42

What is an organization primarily of academics and practicing accountants?

Back 42

American Accounting Association

Front 43

What are when companies are becoming more international in their operations by producing, selling, and buying products and services in other countries?

Back 43

International Accounting Standards Board (IASB)

Front 44

What was established in 1984 and operates under the auspices of the Financial Accounting Foundation?

Back 44

Governmental Accounting Standards Board (GASB)

Front 45

What is a non-profit corporation that was created by Congress in the Sarbanes-Oxley Act of 2002; made because of Enron WorldCom?

Back 45

Public Company Accounting Oversight Board (PCAOB)

Front 46

What formalized the commitment to converge FASB and IASB standards in 2002?

Back 46

Norwalk Agreement

Front 47

What are the key FASB initiatives (6)?

Back 47

1. Conducting long-term joint projects wth IASB 2. Participating in short-term joint convergence projects. 3. Monitoring IASB projects 4. Conducting convergence research project 5. Explicitly considering convergence potential in all decisions 6. Having a liaison IASB member on site at the FASB offices

Front 48

Who is committed to high-quality international accounting standards?

Back 48

SEC

Front 49

Who has recommended that future accounting standards should not follow a rules-based or principles based only approach, but should be objectives - oriented?

Back 49

SEC

Front 50

Who has objectives to develop a conceptual framework of accunting theory and to establish standards (GAAP) for financial accounting practices?

Back 50

FASB

Front 51

What is when financial statements and other means of financial reporting should include explanations and interpretations by management to help external users understand the financial information provided?

Back 51

Full disclosure

Front 52

What provides a measure of overall company performance?

Back 52

return on investment

Front 53

What is the uncertainty or unpredictability surrounding a company's future results?

Back 53

Risk

Front 54

What is the ability of a company to use its financial resources to adapt to change?

Back 54

Financial Flexibility

Front 55

What refers to how quickly a company can convert its assets into cash to pay its bills?

Back 55

Liquidity

Front 56

What is the ability of a company to maintain a given physical level of operations?

Back 56

Operating Capability

Front 57

What is to be the overall qualitative characteristic for accounting information?

Back 57

Decision Usefulness

Front 58

What is when information has the potential to make a difference in a decision?

Back 58

Relevant

Front 59

What are the three components of relevance?

Back 59

Predictive value, Feedback value, Timeliness

Front 60

What is if it can be used to correctly forecast the outcome of some event of a firm?

Back 60

Predictive Value

Front 61

What if it can confirm or correct prior expectations?

Back 61

Feedback Value

Front 62

What is when the user has access to it before a decision has to be made?

Back 62

Timeliness

Front 63

What is when information is reasonably free from error and bias and faithfully represents what it purports to represent?

Back 63

Reliability

Front 64

What are the three components of reliability?

Back 64

Verifiability, Representational Faithfulness, Neutrality

Front 65

What is the information can be substantiated by accountants who can agree that the measurement method is without material error or bias?

Back 65

Verifiability

Front 66

What is a primary concern of the independent auditor?

Back 66

Verification

Front 67

What is the transaction reflects the economic substance rather than legal form?

Back 67

representational Faithfulness

Front 68

What is the information presented is unbiased?

Back 68

Neutrality

Front 69

What are the secondary qualitative characteristics of accounting information?

Back 69

Comparability and Consistency

Front 70

What is the information is similar across companies?

Back 70

Comparability

Front 71

What is the information is similar across time?

Back 71

Consistency

Front 72

What is qualitative?

Back 72

relevance

Front 73

What is quantitative?

Back 73

materiality

Front 74

What is the magnitude of an omission or misstatement of accounting information that makes it likely the judgement of a reasonable person relying on the information would have been influenced by the omission or misstatement?

Back 74

Materiality

Front 75

What are the probable future economic benefits obtained and controlled by a company as a result of past transactions or events?

Back 75

Assets

Front 76

What are the probable future sacrifices of economic benefits arising from present obligations of a company to transfer assets or provide services in the future as a result of past transactions or events?

Back 76

liabilities

Front 77

What is the owners' residual interest in the net assets of a company (assets - liabilities)?

Back 77

Equity

Front 78

What is the change in owners' equity from nonowner sources (not the same as net income)?

Back 78

Comprehensive Income

Front 79

What are inflows (enhancement of assets or settlement of liabilities) from delivering or producing goods, services, or other activities that represent the ongoing major or central operations of the entity (measured on an accrual basis)?

Back 79

Revenues

Front 80

What are actual or expected cash outflows (or equivalent) that are the result of the entity's ongoing major or central operations (measured on the accrual basis)?

Back 80

Expenses

Front 81

What result from peripheral or incidental transactions of an entity (other than additional investment or disinvestment) (measured on an accrual basis)?

Back 81

Gains and losses

Front 82

What is the entity assumption assumes that a proprietorship, partnership, or corporation's financial activities are distinguished from other financial organizations in keeping its own financial records and reports?

Back 82

Economic Entity

Front 83

What is assumption that assumes the company will continue to operate in the near future, unless substantial evidence to the contrary exists?

Back 83

Going Concern

Front 84

What is in accordance with this assumption, a company prepares financial statements at the end of meaningful and consistent time frame. This assumption is the basis for the adjusting entry process at period-end?

Back 84

Periodicity

Front 85

What is there must be some basis for measuring the exchange of goods or services. The reporting country's currency is the unit of exchange. Stable unit of measure?

Back 85

Monetary unit

Front 86

What is usually, the exchange price is retained in the accounting records as the value of an item until it is removed from the records?

Back 86

Historical Cost

Front 87

What is the revenue is recognized when realized or realizable and earned usually at the point of sale?

Back 87

Revenue Recognition

Front 88

What principle states that to determine the income of a company for an accounting period, the company computes the total expense involved in obtaining the revenues of the period and relates these total expenses to the total revenues recorded in the period?

Back 88

Matching Principle

Front 89

What is expenses are recognized due to cause and effect, due to systematic and rational allocation, and immediately?

Back 89

Expenses Recognition

Front 90

What states that when alternative accounting valuations are equally possible, the accountant should select the one that is least likely to overstate assets and income in the current period?

Back 90

Conservatism

Front 91

What information that could make a difference in the user's decision process must be disclosed, includes qualitative and non-financial information that is necessary to make the report complete and not misleading?

Back 91

Full Disclosure

Front 92

What is an industry specific reporting rule that differs from the general rules and has been approved by a standard setting body?

Back 92

Industry Practice

Front 93

What is Contributed Capital + Retained Earnings?

Back 93

Stockholders' Equity

Front 94

What is Beginning Retained Earnings + Net Income - Dividends?

Back 94

Retained Earnings

Front 95

What is Revenues - Expenses?

Back 95

Net Income

Front 96

What is a transfer of something valuable between parties?

Back 96

Transaction

Front 97

What is an internal or external "happening" that affects the company?

Back 97

Event

Front 98

Transactions and events are entered into the accounting system based on the details of related what?

Back 98

Source Documents

Front 99

Monetary amounts related to the transactions and events are stored in the accounting system using what?

Back 99

Accounts

Front 100

What is a numbering system designed to organize accounts efficiently and effectively?

Back 100

Chart of Accounts

Front 101

What summarizes the results of a company's income-producing activities for an accounting period?

Back 101

Income Statement

Front 102

What summarizes the amounts of a company's assets, liabilities, and stockholders' equity on a particular date?

Back 102

Balance Sheet

Front 103

What summarizes a company's cash receipts and cash payments during the accounting period?

Back 103

Statement of Cash Flows

Front 104

What are the three categories for adjusting entries?

Back 104

Accruals, Deferrals, and Estimated Items

Front 105

What occur when revenues and expenses are recorded before cash is received or paid out( accrued rev. and exp.)?

Back 105

Accrual

Front 106

What occur when revenues and expenses are recorded after cash is received or paid out (unearned or deferred revenues and prepaid expenses)?

Back 106

Deferrals

Front 107

What adjusting entries are depreciation and bad debt expense?

Back 107

Estimated items

Front 108

What are used to transfer temporary account balances to permanent accounts?

Back 108

Closing Entries

Front 109

What account is a temporary account that facilitates this process of closing entries?

Back 109

Income Summary

Front 110

What should be made for an AJE that creates/increases a balance sheet account?

Back 110

Reversing Entries

Front 111

What is customer receives refund for damaged goods returned?

Back 111

Sales Return

Front 112

What is customer receives refund for damaged goods retained?

Back 112

Sales Allowance

Front 113

What is discount is offered for prompt cash payment. The account is contra-sales revenue account that reduces Net Sales?

Back 113

Sales (cash) Discount

Front 114

What is sales less returns, allowances, and discounts?

Back 114

net sales

Front 115

What is beginning inventory + Net purchases - Ending Inventory?

Back 115

Cost Of Goods Sold

Front 116

What is purchases - purchase returns & allowances - purchase discounts?

Back 116

Net Purchases