Financial Accounting Final

Tangible assets – those assets that can be appraised by value or seen or touched.
Additional paid in capital – Balance Sheet
Owners'/stockholders' equity
Current cost – amount would pay to acquire the asset today (replacement cost)
Gross Profit Ratio – Gross Profit / Net Sales
Creditors are an important group of external stakeholders. They are primarily interested in the ability of the company to generate sufficient cash flow in order to repay the amounts owed. Stockholders are another significant stakeholder in the company. They are primarily interested in the company's ability to effectively raise capital and to invest that capital in projects with a rate of return in excess of the cost of the capital raised, that is, to increase the value of the firm. Regulators such as the SEC and the tax authorities, including the IRS and state and local tax officials, are important constituents that are interested in knowing whether the company is complying with all applicable laws and regulations.

b. Generally Accepted Accounting Principles (GAAP) are the various methods, rules, practices, and other procedures that have evolved over time in response to the need to regulate the preparation of financial statements. They are primarily set by the Financial Accounting Standards Board (FASB), a private sector entity with representatives from companies that issue financial statements, accounting firms that audit those statements, and users of financial information. Other bodies that contribute to GAAP are the AICPA, the EITF, and the SEC.

c. Financial information provides users with information that is useful in assessing the financial performance of companies and, therefore, in setting stock and bond prices. To the extent that these prices are accurate, the costs of the funds that companies raise will accurately reflect their relative efficiency and risk of operations. Companies that can utilize capital more effectively will be able to obtain that capital at a reasonable cost and society's financial resources will be effectively allocated.

d. First, the preparation of financial statements involves an understanding of complex accounting rules and significant assumptions and considerable estimation. Second, GAAP allows for differing accounting treatments for the same transaction. And third, auditors are at a relative information disadvantage vis-à-vis company accountants. As the capital markets place increasing pressures on companies to perform, accountants are often placed in a difficult ethical position to use the flexibility given to them under GAAP in order to bias the financial results or to use their inside information to their advantage. –

taking two copies of source document so one is posted in general ledger and one to subsidiary ledger – Direct posting
The vital centers for the control of heart rate, respiration, and blood pressure are located in the :
Sales. – A temporary owner's equity account used to record the earning of revenue.
Accounting Cycle – Analyze, Adjust, Prepare, Close
The vitаl centers fоr the cоntrоl of heаrt rаte, respiration, and blood pressure are located in the :
public company accounting oversight board – group charged with determining auditing standards and reviewing the performance of auditing firms

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