1. Prepare 2. Analyze 3. Gather 4. Make decisions 5. Implement 6. Observe. - Accounting steps.
Inside, Internal - Managerial info is inside or outside
... [Show More] the business?
True. Financial accounting is only outside. Managerial accounting can be inside AND outside. - True or false, managerial accounting uses BOTH managerial and financial accounting?
Outside, External, includes lenders and investors - Financial is inside or outside the business?
Balance sheet, income statement, and statement of cash flows - The financial statement includes what 3 documents
Balance Sheet - Point in time, Assets (resources) and liabilities (obligations)
Income Statement - Period of time (usually 1 year), amount of profit made
Statement of Cash flows - Period of time, where money came from, and where it went. Inflow and outflow of cash (Cash Flows). Change in money for the period.
Balance sheet equation - Assets= liabilities + equity
Revenue equation - Net income=Revenue - Expenses
Operating, investing, and financial activities - The statement of cash flows includes what three activities
FASB: Financial accounting standards. Private, no government involvement. It is a public process, includes individuals experienced in business and accounting (7 members). - The decision makers in the U.S. (accounting rules)
GAAP: General accepted accounting principles - Developed by accounting rule makers. No Legal authority.
comparability - We need accounting rules for...
SEC: Security and exchange commission. Located in Article 1, Sec 8, Clause 3 - U.S. gov agency responsible for ensuring that investors, creditors, and other financial statement users are provided with reliable information. It watches behavior in financial markets.
Registration statements (prospectus), Form 10-K, Form 10-Q, and schedule 14A (proxy statement). These are all publicly viewable. - What forms do the SEC regulate?
Oversees stock exchanges, can suspend a company, investigate and suspect violations of the SEC rules. - What does the SEC do?
YES. The SEC has legal authority to establish accounting rules and disclosure requirements. - Does the SEC have legal authority?
USA congress->SEC->FASB - Financial accounting rule per the US constitution
FASB: Financial accounting standards board - The SEC created the
GAAP (has no legal authority) - FASB created
AIPCA: American INSTITUTE of certified public accountants. - What sets auditory standards, continue education credits, CPA exam, and is the code of professional conduct?
Only CPA's: Certified public accountants. - Who is the only person who can sign audit reports?
PCAOB: Public company accounting oversight board. - The Sarbanes-Oxley Act "SOX" created?
Under supervision of the SEC. - PCAOB is under supervision of?
PCAOB: Public Company Accounting OVERSIGHT Board. - Who appoints members, approves actions, gov standards, inspections, and investigations? It is a private group and OVERSEES. AUDITORS?
U.S. Gov agency that collects and regulates income taxes. Their primary goal is to collect revenue. - IRS
Economic income and accounting income books. & Tax income, and cash flow books. - There are two sets of books. Tax Books and Financial accounting books.
Similar to the FASB, but not 100% the same. It is international, everywhere but the U.S. - IASB: Internatonal Accounting Standard Board
Who enforces and national policies. - Barriers to international convergence are?
Condorsement - Rules set centrally, but legally adopted and enforced locally? [Show Less]