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TAMU ACCT 229 Exam 1Questions And Answers 100% Solved
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TAMU ACCT 229 Exam 1Questions And Answers 100% Solved
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TAMU ACCT 229 Exam 1Questions AndAnswers 100% Solved
Key provisions of SOX (management) - ✔✔1. asses and report the effectiveness of the
company's internal control structure and procedures.
2. code of ethics established and reported.
3. if the financial statements are inaccurate or incomplete SOX requires the CEO and CFO to
certify annual financial statements.
4. Firms must provide a mechanism for anonymous reporting of fraudulent activities (whistle-blower
protection).
Key provisions of SOX (board of directors) - ✔✔1. Composition of the Board of Directors requires
some directors to be independent of management
2. Audit committee members be independent of management
Key provisions of SOX (the external auditors) - ✔✔1. stronger rules regarding auditor
independence. audit firms can no longer provide management consulting services to its audit clients
2. Auditors report to the clients audit committee rather than to the clients management team
Key provisions of SOX (enforcement) - ✔✔1. PCAOB (public company accounting oversight board)
has the power to regulate auditing firms
2. all accounting firms that audit publicly traded companies must register with the PCAOB and follow its
rules
, Business - ✔✔all activities necessary to provide the members of an economic system with goods and
services
Understandability - ✔✔information should be comprehensible to those who are willing to spend time
to understand it.
Relevance - ✔✔capacity of information to make a difference in a decision
Faithful Representation - ✔✔is complete, neutral, and free from error
Comparability - ✔✔allows user to analyze two or more companies and look for similarities
or differences.
-compare company one 8/2016 to company 2 8/2016
Consistency - ✔✔allows comparisons within a company from one accounting period to the next.
-compare company 1 8/2016 to company 1 8/2015
Materiality - ✔✔the dollar magnitude of the transaction makes a difference in how it is recorded.
Does an error in any way affect the judgment of someone relying on the information.
Conservatism - ✔✔dont overstate assets or revenues, dont understate liabilities or expenses. Use
least optimistic estimate when two estimates of amounts are about equally likely
How to analyze profitability - ✔✔Gross Profit Ratio
Profit Margin
Gross Profit & Ratio - ✔✔ratio of gross profit to sales.
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