ACG 3024 - Chapter 1

A primary objective of financial reporting is to provide timely information about a firm's _____ and cash flow

earnings

Financial reporting is primarily aimed at meeting the needs of...

external users of accounting information who do not otherwise have access to the firm's records

The process that results in the preparation and reporting of financial statements for an entity is referred to as _____ accounting.

financial

The goal of the _____ is to develop a single set of high-quality, understandable, enforceable, and globally accepted financial reporting standards.

International Accounting Standards Board (IASB)

In 2001, the (1) _____ which operates under the (2) _____ Foundation, was formed in a restructuring effort and has since assumed the responsibilities of the (3) _____ which was disbanded at that time.

1. IASB (International Accounting Standards Board) 2. IFRS (International Financial Reporting Standards) 3. IASC (International Accounting Standards Committee)

What is true of financial accounting?

1. It may provide information that is helpful in assessing an entity's future prospects 2. It is a form of historical scorekeeping 3. It is not the sole source of information about an entity 4. It is measured in dollars and cents

What is true regarding the Financial Accounting Standards Board (FASB) Accounting Standards Codification?

1. It superseded the FASB's SFAS series and other divergent sources of U.S. generally accepted accounting principles (GAAP) 2. It became effective in July 2009 3. It made it easier to access and research authoritative accounting standards

What are considered key elements of ethical behavior for a professional accountant?

1. Maintaining independence, both in appearance and in fact 2. Maintaining integrity: being honest and forthright in one's dealings and communication with others 3. Having competence by acquiring and maintaining the professional knowledge and skill to adequately perform the work assigned 4. Accepting an obligation to serve in the best interests of the employer, the client, and the public 5. Maintaining objectivity: being impartial and free from conflicts of interest

An unqualified, or, clean, independent auditor's report does what exactly?

1. States that it is the independent auditor's responsibility to express an opinion about the financial statements 2. Explains that the audit was conducted in accordance with the standards of the GAAP (United States) 3. States that the named financial statements "present fairly, in all material respects" the entity's cash flows for the period

A report by management on the effectiveness of the company's internal control over financial reporting is required for all Securities and Exchange Commission-regulated companies under...

section 404 of the Sarbanes-Oxley Act of 2002

The statutory authority to establish accounting principles for companies whose securities are publicly traded in the United States rests with the...

securities and exchange commissions (SEC)

An unqualified, or "clean" independent auditor's opinion...

states that the auditor's work requires the application of generally accepted auditing standards (GAAS)

Provide a brief description of Luca Pacioli...

1. He was a Franciscan monk 2. He was the author of "method of Venice" system 3. He was a mathematics professor

Accounting information is required by which entities?

Not-for-profit entities, such as hospitals, voluntary health, welfare organizations, trade associations, and country clubs

What is true regarding the objectives of general-purpose external financial reporting for government-sponsored entities engaged in activities that are not unique to government?

They should be similar to those of nonbusiness and business organizations engaged in similar activities.

Section 404 of the Sarbanes-Oxley Act of 2002 requires all SEC-regulated companies to include in their annual reports...

a report by management on the effectiveness of the company's internal control over financial reporting

The Sarbanes-Oxley Act of 2002 (SOX) now prohibits...

auditing firms from performing a variety of non-auditing services for financial statement audit clients

The results of operations for an entity are reported for a _____ of time.

period/point

What may be said about the role of an internal auditor?

1. The qualifications of an internal auditor are similar to those of any other professional accountant 2. Performing functions much like those performed by an independent (external) auditor, but perhaps on a smaller scale 3. Analyzing the operating efficiency of one of the company's divisions

Tax practitioners typically develop specialization in the taxation of what exactly?

1. Trusts and estates 2. Partnerships in general 3. International tax law issues

Accounting information is required by governmental units at which of the following levels?

1. Municipal 2. State 3. Federal

Financial accounting when compared to managerial and cost accounting...

has primarily an external orientation and are based primarily on past historical cost data

Managerial accounting and cost accounting when compared to financial accounting...

have primarily an internal orientation, and the data are more likely to be used in a future-oriented way

Accounting is the process of _____ economic information about an organization for the purpose of making decisions and informed judgments.

identifying, measuring, and communicating

The consulting practices of several large auditing firms have been split off into separate entities in an effort to help achieve _____ in fact and appearance.

independence

What was the first known text to describe a comprehensive double-entry bookkeeping system called?

method of Venice system

Financial accounting generally refers to the...

process that results in the preparation and reporting of financial statements for an entity

Financial reporting is designed to meet the needs of users by providing information that is...

relevant to making rational investment and credit decisions and other informed judgments

The Financial Accounting Standards Board (FASB) Accounting Standards Codification...

represents a single source of U.S. generally accepted accounting principles (GAAP)