Financial Accounting Overview

Which of the following is NOT considered a business activity?

Financial accounting helps communicate financial information to _____ who have an interest in the company.

The balance sheet is a report that summarizes a company's financial performance over a period of time.

What are the three primary financial statements used to communicate financial information to external stakeholders?

Match the following financial statements with their corresponding descriptions:

Which of these pronouncements issues by the FASB are considered GAAP?

Which of the following is NOT a stakeholder of a company?

The FASB's Accounting Standards Codification organizes U.S. GAAP into one source, replacing individual FASB Statements.

What is the primary objective of the Emerging Issues Task Force (EITF)?

What is the accounting equation that represents the relationship between assets, liabilities, and shareholders' equity?

Financial accounting focuses on the _____ activities of economic entities.

Which of the following is NOT a component of the Statement of Cash Flows?

The FASB developed the Accounting Standards Codification to ______ user access to authoritative U.S. GAAP.

Match the following FASB pronouncements to their primary characteristics:

The Statement of Shareholders' Equity provides information about how the company's net income has changed over time.

What is the formula for calculating net income (loss)?

The [BLANK] provides managers' insights into strategies, performance evaluation, and expectations about the future.

Match the following financial statements with their primary purpose:

What is the primary purpose of Generally Accepted Accounting Principles (GAAP)?

The Sarbanes-Oxley Act of 2002 only affects publicly traded companies.

What is the primary responsibility of independent auditors?

What was the purpose of the Accounting Research Bulletins (ARBs) issued during a specific period?

The Accounting Principles Board (APB) was established by the American Institute of Certified Public Accountants (AICPA) in 1959.

What were the pronouncements issued by the APB called?

The Study Group on Establishment of Accounting Principles, also known as the _______ Committee, investigated the APB and proposed changes.

Match the following accounting bodies with their key characteristics:

Which of these is NOT a difference between the FASB and the APB?

The FASB is mandated to represent only the interests of the public accounting profession when establishing accounting standards.

What is the primary mission of the FASB?

Which of the following is NOT a source of authoritative GAAP for U.S. companies?

The IASB includes members from various countries.

What is the ultimate goal of international convergence of accounting standards?

The SEC mandates that corporations are subject to either ______ or IFRS.

Match the following organizations with their primary roles.

Which of the following is NOT a key step in the IASB's standard-setting process?

The SEC currently requires foreign companies using IFRS to reconcile their financial statements to U.S.GAAP.

What are the main differences between the Codification and the previous GAAP structure?

What is the main controversy in setting accounting standards?

The Securities Exchange Commission (SEC) was established in response to the stock market crash of 1929 and the Great Depression.

What is the primary purpose of general-purpose financial statements?

The SEC administers the ______ and the ______ among other acts.

What organization was established to help develop and standardize financial information presented to stockholders?

The FASB has no legal authority to prescribe accounting practices for companies.

What was the purpose of the Committee on Accounting Procedure (CAP)?

The SEC administers the __________ and the __________ among other acts.

Match the following organizations with their roles:

Which act was established to increase government regulation of financial institutions after the Great Depression?

The SEC has always accepted standards proposed by the private sector without question.

What prompted the creation of accounting standards in the United States?