Podcast
Questions and Answers
What does the Expense Recognition Principle dictate?
What does the Expense Recognition Principle dictate?
- Only known expenses need to be recognized in the financial statements.
- Expenses should be recorded regardless of revenue generation.
- Expenses incurred to generate reported revenue should be recorded. (correct)
- Expenses must be recorded only when cash is received.
Which assumption allows a business to be considered separate from its owner?
Which assumption allows a business to be considered separate from its owner?
- Business Entity Assumption (correct)
- Monetary Unit Assumption
- Accounting Period Assumption
- Going-Concern Assumption
What is the purpose of the Full Disclosure Principle in financial reporting?
What is the purpose of the Full Disclosure Principle in financial reporting?
- To disclose only audited financial statements to stakeholders.
- To minimize the information shared with investors.
- To provide details that could impact users’ decisions in the notes to the financial statements. (correct)
- To ensure all non-financial information is omitted.
Which assumption relates to the idea of expressing transactions in money units?
Which assumption relates to the idea of expressing transactions in money units?
How does the Time Period Assumption affect financial reporting?
How does the Time Period Assumption affect financial reporting?
What does the Sarbanes–Oxley Act primarily aim to address?
What does the Sarbanes–Oxley Act primarily aim to address?
Which provision of the Dodd-Frank Act allows for the recovery of excessive pay?
Which provision of the Dodd-Frank Act allows for the recovery of excessive pay?
Which of the following statements is true regarding ethics in accounting?
Which of the following statements is true regarding ethics in accounting?
What is a possible consequence for executives who fail to comply with the requirements of the Sarbanes–Oxley Act?
What is a possible consequence for executives who fail to comply with the requirements of the Sarbanes–Oxley Act?
What does the whistleblower provision of the Dodd-Frank Act provide?
What does the whistleblower provision of the Dodd-Frank Act provide?
Which of the following is a common reason that individuals may commit fraud?
Which of the following is a common reason that individuals may commit fraud?
What is a key requirement of the Sarbanes–Oxley Act?
What is a key requirement of the Sarbanes–Oxley Act?
How are ethics generally perceived in the context of accounting?
How are ethics generally perceived in the context of accounting?
What is the primary purpose of Generally Accepted Accounting Principles (GAAP)?
What is the primary purpose of Generally Accepted Accounting Principles (GAAP)?
Why is comparability important in financial accounting?
Why is comparability important in financial accounting?
Which organization is responsible for issuing International Financial Reporting Standards (IFRS)?
Which organization is responsible for issuing International Financial Reporting Standards (IFRS)?
What does reliable information in financial accounting imply?
What does reliable information in financial accounting imply?
What is a key characteristic of relevant information in financial reporting?
What is a key characteristic of relevant information in financial reporting?
In the context of global finance, why is there an increasing demand for comparability in accounting reports?
In the context of global finance, why is there an increasing demand for comparability in accounting reports?
What does IFRS primarily focus on?
What does IFRS primarily focus on?
What does GAAP ensure about financial statements?
What does GAAP ensure about financial statements?
What is the equity when assets are $99,000 and liabilities are $32,000?
What is the equity when assets are $99,000 and liabilities are $32,000?
Which accounts are involved in the transaction when Chas Taylor invests $30,000 to start FastForward?
Which accounts are involved in the transaction when Chas Taylor invests $30,000 to start FastForward?
How is the accounting equation represented after Chas Taylor's investment?
How is the accounting equation represented after Chas Taylor's investment?
In the transaction where the company purchases supplies for $2,500 cash, which accounts are involved?
In the transaction where the company purchases supplies for $2,500 cash, which accounts are involved?
If liabilities are zero, what would be the equity if assets total $50,000?
If liabilities are zero, what would be the equity if assets total $50,000?
What happens to cash when the company purchases supplies for $2,500?
What happens to cash when the company purchases supplies for $2,500?
Which of the following equations correctly represents the accounting equation?
Which of the following equations correctly represents the accounting equation?
If a company’s equity increases, what can be inferred about its assets or liabilities?
If a company’s equity increases, what can be inferred about its assets or liabilities?
What is the total amount of accounts receivable after providing consulting services and rental facilities for credit?
What is the total amount of accounts receivable after providing consulting services and rental facilities for credit?
How does the transaction of providing services and facilities for credit affect equity?
How does the transaction of providing services and facilities for credit affect equity?
What is the new total for cash after all transactions?
What is the new total for cash after all transactions?
What accounts are affected when services are provided on credit?
What accounts are affected when services are provided on credit?
What is the effect of expenses on equity?
What is the effect of expenses on equity?
Which of the following amounts reflects the total revenues recognized from providing services for credit?
Which of the following amounts reflects the total revenues recognized from providing services for credit?
What is the accounting equation after the transactions are recorded?
What is the accounting equation after the transactions are recorded?
When rent revenues are generated from facilities rented, how does it affect the overall accounting equation?
When rent revenues are generated from facilities rented, how does it affect the overall accounting equation?
What is the formula to calculate return on assets (ROA)?
What is the formula to calculate return on assets (ROA)?
How does risk relate to expected returns?
How does risk relate to expected returns?
Which statement about return on assets (ROA) is true?
Which statement about return on assets (ROA) is true?
Which of the following best describes the role of average total assets in calculating ROA?
Which of the following best describes the role of average total assets in calculating ROA?
What is a common misconception regarding the relationship of return and risk?
What is a common misconception regarding the relationship of return and risk?
What can be inferred if a company has a very low return on assets?
What can be inferred if a company has a very low return on assets?
Which of the following is NOT a consideration when analyzing return on assets?
Which of the following is NOT a consideration when analyzing return on assets?
Flashcards
Fraud Triangle
Fraud Triangle
Opportunity, Pressure, Rationalization.
Pressure to Commit Fraud
Pressure to Commit Fraud
Pressure that motivates an individual to commit fraud, such as unpaid bills, financial hardship, or even a desire for a lavish lifestyle.
Sarbanes-Oxley Act (SOX)
Sarbanes-Oxley Act (SOX)
A law that requires companies to document and verify their internal controls. It aims to prevent financial abuse and ensure greater accountability.
Dodd-Frank Wall Street Reform and Consumer Protection Act
Dodd-Frank Wall Street Reform and Consumer Protection Act
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Ethics
Ethics
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Good ethics are good business.
Good ethics are good business.
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Generally Accepted Accounting Principles (GAAP)
Generally Accepted Accounting Principles (GAAP)
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Revenue Recognition Principle
Revenue Recognition Principle
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Going-Concern Assumption
Going-Concern Assumption
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Expense Recognition Principle (Matching Principle)
Expense Recognition Principle (Matching Principle)
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Full Disclosure Principle
Full Disclosure Principle
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Business Entity Assumption
Business Entity Assumption
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Monetary Unit Assumption
Monetary Unit Assumption
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Reliable Information
Reliable Information
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Relevant Information
Relevant Information
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Comparable Information
Comparable Information
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International Accounting Standards Board (IASB)
International Accounting Standards Board (IASB)
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International Financial Reporting Standards (IFRS)
International Financial Reporting Standards (IFRS)
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Issuing International Financial Reporting Standards (IFRS)
Issuing International Financial Reporting Standards (IFRS)
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Why is global comparability in accounting reports important?
Why is global comparability in accounting reports important?
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Assets
Assets
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Liabilities
Liabilities
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Equity
Equity
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Revenues
Revenues
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Expenses
Expenses
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Accounting Equation
Accounting Equation
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Investment by Owner
Investment by Owner
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Purchase Supplies for Cash
Purchase Supplies for Cash
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What is the accounting equation?
What is the accounting equation?
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What are assets?
What are assets?
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What are liabilities?
What are liabilities?
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What is equity?
What is equity?
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What is providing services for credit?
What is providing services for credit?
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What is Accounts Receivable?
What is Accounts Receivable?
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What are Consulting Revenues and Rental Revenues?
What are Consulting Revenues and Rental Revenues?
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How does the accounting equation help us understand business transactions?
How does the accounting equation help us understand business transactions?
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Return on Assets (ROA)
Return on Assets (ROA)
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Risk
Risk
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Low Perceived Risk
Low Perceived Risk
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Return
Return
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Relationship between Return and Risk
Relationship between Return and Risk
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Income Statement
Income Statement
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Balance Sheet
Balance Sheet
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Statement of Cash Flows
Statement of Cash Flows
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Study Notes
Introduction to Digital Management - Chapter 1
- The course is Introduction to digital management - 2, taught by Prof. Maurizio Massaro.
- The chapter focuses on accounting in business.
- The course is offered at Ca' Foscari University of Venice.
Chapter 1 Learning Objectives
- Conceptual:
- Explain the purpose and importance of accounting.
- Identify users and uses of, and opportunities in, accounting.
- Explain why ethics are crucial to accounting.
- Explain generally accepted accounting principles (GAAP) and define and apply several accounting principles.
- Identify and describe the three major activities of organizations: financing, investing, and operating.
- Analytical:
- Define and interpret the accounting equation and each of its components.
- Compute and interpret return on assets (ROA).
- Explain the relation between return and risk (Appendix 1A).
- Procedural:
- Analyze business transactions using the accounting equation.
- Identify and prepare basic financial statements and explain how they interrelate.
Importance of Accounting
- Accounting is an information and measurement system.
- It identifies, records, and communicates an organization's business activities.
- The process involves identifying events, recording them chronologically, and communicating the information.
Learning Objective C1: Explain the Purpose and Importance of Accounting
- Accounting is essential for decision making.
- Reliable information is crucial for informed decisions.
Learning Objective C2: Identify Users and Uses of, and Opportunities in, Accounting
- Accounting information is used by external and internal users.
- External users include lenders, shareholders, auditors, board of directors, and regulators.
- Internal users include research and development managers, purchasing managers, human resource managers, marketing managers, and production managers.
Learning ObjectivC3: Explain Why Ethics are Crucial to Accounting
- Ethics are beliefs that distinguish right from wrong.
- Accounting ethics are accepted standards of good and bad behavior.
- Ethical concerns need to be identified, analyzed, and ethical decisions need to to be made.
- The goal of accounting is to provide reliable information for decision making.
- The fraud triangle highlights three factors that contribute to fraud: opportunity, pressure, and rationalization.
- SOX (Sarbanes-Oxley Act) and Dodd-Frank Wall Street Reform and Consumer Protection Act improve accounting controls and ethical behavior.
Learning Objective C4: Explain Generally Accepted Accounting Principles (GAAP) and Define and Apply Several Accounting Principles
- GAAP aims to make accounting information relevant, reliable & comparable.
- Accounting information needs to be: relevant, reliable, and comparable.
- Principles, assumptions, and constraints govern financial reporting.
- General principles, including assumptions, concepts, and guidelines, are used for preparing financial statements. Specific principles are detailed rules employed in reporting events.
- Cost-benefit and materiality are important accounting constraints.
- Measurement principle (cost principle) signifies accounting information is based on actual costs.
- Revenue recognition establishes when revenue should be recorded.
- Expense recognition (matching principle) records expenses related to particular revenue.
- Full disclosure ensures that all relevant information is revealed in notes to statements.
- Going concern, monetary unit, business entity, and time period are accounting assumptions.
Learning Objective A1: Define and Interpret the Accounting Equation
- Assets = Liabilities + Equity
- Expanded equation: Assets = Liabilities + Contributed Capital + Retained Earnings
- Assets include cash, supplies, equipment, and accounts receivable.
- Liabilities include accounts payable and notes payable.
- Equity includes common stock and retained earnings.
- Net income drives retained earnings.
Learning Objective P1: Analyze Business Transactions Using the Accounting Equation
- Business transactions include investment by owner, purchase supplies for cash, purchase equipment for cash, purchase supplies on credit, providing services for cash, and payment of accounts payable, paying cash dividend, and more.
Learning Objective P2: Identify and Prepare Basic Financial Statements and Explain How They Interrelate
- Financial statements consist of the income statement, balance sheet, statement of cash flow, and statement of retained earnings.
- The income statement shows revenues, expenses, and net income.
- The balance sheet shows assets, liabilities, and equity.
- The statement of cash flows shows cash inflows and outflows.
- The statement of retained earnings explains changes in retained earnings.
Learning Objective A2: Compute and Interpret Return on Assets (ROA)
- Return on Assets (ROA) quantifies the relationship between net income and average total assets.
- ROA =(Net Income / Average Total Assets) *100
Learning Objective A3: Explain the Relation between Return and Risk (Appendix 1A)
- Risk is the uncertainty of return.
- Lower risk generally equals lower expected return.
Learning Objective C5: Identifying and Describing the Three Major Activities of Organizations
- Organizations carry out three major activities: Financing, Investing, and Operating.
- Financing involves providing resources to pay for resources. It includes both owner and non-owner financing.
- Investing involves acquiring (or disposing of) the resources (assets) to create and sell products /services.
- Operating activities involve researching, developing, producing, distributing, and marketing of products/services
- Strategic management is the right mix of operating activities for the type of organization, its plans, and its market.
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Description
Test your knowledge on key accounting principles and ethics with this quiz. Explore topics like the Expense Recognition Principle, the Sarbanes–Oxley Act, and ethical considerations in financial reporting. Perfect for students and professionals looking to refresh their understanding of accounting standards.
