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BUSN 70 Midterm 2 Questions And Answers 2024 Update
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BUSN 70 Midterm 2 Questions And Answers 2024 Update
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BUSN 70 Midterm 2 Questions AndAnswers 2024 Update
accounting ANS✔✔ the recording, measurement, and interpretation of financial info
bookkeeping ANS✔✔ when a business transaction is recorded; more mechanical than accounting
dif between accountants and bookkeepers ANS✔✔ accountants have more training to interpret/analyze
financial info
certified public accountant (CPA) ANS✔✔ state certified, provides accounting services to public for a fee
-must be independent of business they serve to be objective
-can only audit someone else's work
private accountants ANS✔✔ accountants employed by large corporations, government agencies
types of accounting ANS✔✔ -financial accounting
-managerial accounting
financial accounting ANS✔✔ prepares info in very structured way for outsiders
managerial accounting ANS✔✔ prepares info for internal company analysis and decision making
What is managerial accounting's greatest concern? ANS✔✔ cash flow
,managers also use accounting statements to report the business's financial performance to
_____________ ANS✔✔ outsiders
annual report ANS✔✔ summary of firm's financial information, products, and growth plans for owners
and potential investors
financial statements are prepared in accordance with GAAP by whom? ANS✔✔ accountants hired by
companies
Who provides opinions on financial statements? ANS✔✔ auditors (auditors check the accountant's
work)
2 opinions:
1) on financial statements
2) controls (did you follow correct procedure to get correct numbers)
auditor opinions terms ANS✔✔ unqualified= good
qualified= bad
material weakness= bad
What's the single most important component of an annual report? ANS✔✔ signature of CPA
When financial statements are accurate, they are termed ___________ ANS✔✔ audited
cash flow ANS✔✔ the movement of money through an organization over a daily, weekly, monthly, or
yearly basis
budget ANS✔✔ forecasts expenses and incomes over a set period of time
,Who cares about accounting? ANS✔✔ -banks
-suppliers
-customers
-investors
-government (taxes)
-employees
-competitors
-industry analysis
What kind of info do people who care about accounting need? ANS✔✔ -accurate
-objective
-consistent
-comparable (to other companies and previous performances of own company)
Why does accounting need a set of principles and standards? ANS✔✔ So that everybody does
accounting the same way
What are the standards/principles called in the US? ANS✔✔ GAAP- Generally Accepted Accounting
Principles
Where does the GAAP come from? ANS✔✔ private organizations not related to the government and
International Financial Reporting Standards
Sarbanes-Oxley Act ANS✔✔ after accounting scandals of Enron and Worldcom in early 2000s, Congress
passed this act in July 2002 that required firms to be more rigorous in their accounting and reporting
practices
, -made firms separate consulting and auditing businesses
-punished corporate executives w/ potential jail sentences
What board did the Sarbanes-Oxley Act establish? ANS✔✔ Public Company Accounting Oversight Board
-audit the auditors
-audit standards
audit ANS✔✔ formal evaluation of fairness and reliability of client's financial statements
Dodd-Frank Act ANS✔✔ Congress passed this in 2010 after 2008 financial crisis to strengthen the
oversight of financial institutions
-limits types of assets commercial banks can buy
-amount of capital banks must maintain
-oversight of "systematic risk"
Why does instructor think bailouts are bad? ANS✔✔ bc people take risks they normally wouldn't bc
they'll know they'll be saved
The Dodd-Frank Act gave who the responsibility of implementing the legislation? ANS✔✔ Federal
Reserve Board
assets ANS✔✔ something a firm owns (tangible + intangible)
-cash
-inventory
-land
-equipment
-buildings
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