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Accounting Quizes with verified correct answers.
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Accounting Quizes with verified correct answers.

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  • August 29, 2024
  • 5
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • accounting quizes with verified correct answers

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  • Accounting 101
  • Accounting 101

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Accounting Quizes with verified correct
answers.
Accounting ANS - the process of measuring, interpreting, and communicating financial information to
enable people inside and outside the firm to make informed decisions



Who are the major users of accounting information? ANS - Owners, stockholders, potential investors,
creditors

Management

Employees, union officials

Lenders, suppliers

Government agencies, economic planners, and consumer groups



Three major business activities in which accountants play a major role ANS - Financing activities provide
necessary funds to start/expand a business

Investing activities provide valuable assets required to run a business

Operating activities focus on selling goods/services, but also consider expenses as important elements of
sound financial management



What is GAAP? ANS - Generally accepted accounting principles

rules for accounting in the US



FASB ANS - Financial accounting standards board

makes the rules for GAAP



SEC ANS - US Securities and exchange commission

chief federal regulator of financial markets and accounting industry

has authority to establish financial accounting and reporting standards for publicly held companies



SOX ANS - Sarbanes-Oxley act

, increased the reporting requirement for publicly traded companies

created because of decline in public trust

why CEO's responsible to know exactly what their people are doing because of SOX



Double-entry bookkeeping ANS - each transaction must have an offsetting transaction



4 Major Financial Statements ANS - Balance sheet

Income statement

Statement of owners' equity

Statement of cash flows



Difference between a current and a long-term asset ANS - Current: cash/other assets that are expected
to be converted to cash within a year

Long-term: assets that are useful for more than 1 year



Balance sheet ANS - What a company owns

What a company owes

Owners'/shareholder's equity leftover

Only accurate for one day (snapshot in time)



Why is a a balance sheet useful? ANS - Can they pay their bills?

How much money has been invested in them?

What do they have?



Two ways to get stuff ANS - Debt financing

Equity financing



Debt financing ANS - Borrowing $ from credit card companies/banks

Have to pay it back over time with interest

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