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D196 Study Guide |Questions with 100% Correct Answers | Updated & Verified | 2024
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What is the role and purpose of accounting? - ✔✔Accounting is used to accumulate, measure, and communicate financial information about organizations. This information is used to make informed decisions regarding resource usage and allocation. Who uses accounting information and why? - ✔✔Managerial Accounting: Internal decision making (managers, CEO's, supervisors, etc.) Financial Accounting: External user benefit (stakeholders, investors, tax authorities, etc.) What are important influences on Accounting? - ✔✔Development of GAAP by FASB in the U.S. and by the IASB worldwide. International business considerations, ethical considerations. What is the role of ethics in Accounting? - ✔✔Accountants are seen by the public as ensuring that misrepresentation of financial information does not occur. What is the PCAOB and what does it do? - ✔✔PCAOB is the Public Company Accounting Oversight Board, and they oversee audits of public companies. Created by the SEC after passage of the Sarbanes Oxley Act of 2002 to restore public confidence. Explain the accounting cycle. - ✔✔1. Analyze transactions
3b. Prepare trial balance
Owner's Equity (method of financing NOT req. repayment) What is the expanded accounting equation? - ✔✔Assets = Liabilities + Capital Stock + Revenues - Expenses - Dividends What are the four financial statements covered? - ✔✔1. The Balance Sheet
Selling Buildings/Land Purchasing Buildings/Land
What is the cash budgeting process? - ✔✔To use past patterns of cash collection and cash disbursement to create a forecast for expected future cash inflows and outflows. Why is cash budgeting important to an entity? - ✔✔Org is able to determine if it will have excess cash for new initiatives or need to borrow additional cash to meet expense demands for the upcoming periods. ENTER CASH BUDGETING WORD PROBLEM HERE - ✔✔ What is a master budget and why do we prepare one? - ✔✔Master budget = blueprint for the upcoming periods' operations. Serves as a framework for changes in plans if the periods' events don't go as planned. What is the master budgeting process for a manufacturing firm? - ✔✔1. All budgets begins with the sales budget or sales forecast.