Accounting for Decision Makers - C213 Exam Study Guide with Complete Solutions Accounting - Correct Answer A system of providing "quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions." American Institute of Certified Public Accountants (AICPA) - Correct Answer The professional organization of certified public accountants in the United States.Balance Sheet - Correct Answer Document which reports the resources of a company (the assets), the company's obligations (the liabilities), and the owners' equity, which represents how much money has been invested in the company by its owners.Bookkeeping - Correct Answer The preservation of a systematic, quantitative record of an activity.Certified Public Accountant - Correct Answer A person who has taken a minimum number of college- level accounting classes, has passed the dreaded CPA exam, and has met other requirements set by his or her state.Financial Accounting - Correct Answer The name given to accounting information provided for and used by external users.Financial Accounting Standards Board (FASB) - Correct Answer Governmental body that sets accounting standards in the United States.Financial Statements - Correct Answer The three primary financial information documents: the balance sheet, income statement, and statement of cash flows.Income Statement - Correct Answer This document reports the amount of net income earned by a company during a period, with annual and quarterly income statements being the most common.Internal Revenue Service (IRS) - Correct Answer The government agency responsible for tax collection and tax law enforcement. 1 / 3
International Accounting Standards Board (IASB) - Correct Answer An independent, international body formed to develop worldwide accounting standards.International Financial Reporting Standards (IFRS) - Correct Answer The accounting standards produced by the IASB.Managerial Accounting - Correct Answer The name given to accounting systems designed for internal users.Public Company Accounting Oversight Board (PCAOB) - Correct Answer A private, non-profit organization that effectively serves as an arm of the SEC in registering, inspecting, and disciplining the auditors of all publicly traded companies.Statement of Cash Flows - Correct Answer This document reports the amount of cash collected and paid out by a company in the following three types of activities: operating, investing, and financing Accounting Equation - Correct Answer Assets = Liabilities + Owners' Equity Accumulated Other Comprehensive Income - Correct Answer The source of these increased assets Assets - Correct Answer Assets are the firm's economic resources, formally defined as "probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events Balance Sheet - Correct Answer A statement of financial position shows the financial resources the company owns or controls and the claims on those resources Book Value - Correct Answer The book value of an asset is the asset's cost minus the asset's accumulated depreciation.Comparability - Correct Answer Tnformation that becomes much more useful when it can be related to a benchmark or standard 2 / 3
Conservatism - Correct Answer a pervasive factor in accounting, can be summarized as follows: When in doubt, recognize all losses but don't recognize any gains.Consistency - Correct Answer The consistency principle states that, once you adopt an accounting principle or method, continue to follow it consistently in future accounting periods.Disclosure - Correct Answer Earnings Per Share (EPS) - Correct Answer EPS tells the owner of one share of stock what he or she really wants to know Entity Concept - Correct Answer The idea that personal financial activity is kept separate from business financial activity Expenses - Correct Answer The amount of assets consumed from the performance of business operations and thus are the opposite of revenues External Audit - Correct Answer audit conducted by external (independent) qualified accountant(s) Financing Activities - Correct Answer Those activities whereby cash is obtained from, or repaid to, owners and creditors Gains - Correct Answer Refers to money made on activities outside the normal business of a company Going Concern Assumption - Correct Answer allows the readers of financial statements to assume that the company will continue on long enough to carry out its objectives and commitments.Historical Cost Convention - Correct Answer An accounting technique that values an asset for balance sheet purposes at the price paid for the asset at the time of its acquisition Income Statement - Correct Answer A company's financial performance for a specified period of time.
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