WGU MBA Program C213 Accounting

WGU MBA Program C213 Accounting Leave the first rating Students also studied Terms in this set (49) Social SciencesBusinessBusiness management Save WGU C202 Managing Human Capita...536 terms dhagedoPreview WGU MBA - Data Driven Decision M...84 terms alicia_cassellPreview

WGU C202: Know to Pass

144 terms Lola_HanaPreview WGU M 1,295 ter rya Practice questions for this set Learn1 / 7Study using Learn Provide information on the accounting assumptions used in preparing the statements and also provide supplemental information not included in the statements themselves.AccountingRecording of day-to-day financial activities of a company and the organization of that information into summary reports used to evaluate the companies financial status.Choose an answer 1Audit Report Findings2Summary of Accounting Policies 3Notes to the Financial Statement4Management Discussion and Analysis Don't know?

Three primary financial statements in financial accounting 1) The Balance Sheet 2) The Income Statement 3) The Statement of Cash Flows Balance SheetA financial statement that reports assets, liabilities, and owner's equity on a specific date.Income StatementA financial statement showing the revenue and expenses for a fiscal period. A company's expenses are subtracted from its revenues in computing net income.Statement of Cash Flowsthe amount of cash collected and paid out by a company in the following three types of activities, operating, investing, and financing.Financial Accounting UsersLenders, investors, company management, suppliers, customers, employees, competitors, government agencies, politicians and the press.FASB (Financial Accounting Standards Board)A private body that sets the accounting standards in the United States.SEC Securities and Exchange CommissionRegulates US stock exchanges AICPA (American Institute of Certified Public Accountants) Professional organization of certified public accountants in the US.Three factors that make right now a time of significant

change in accounting are:

1) Globalization of Accounting Standards 2) Information Technology 3) Accounting scandals including the 2001 Sarbanes-Oxley Act.Financial StatementsIncrease the amount of financial information about a company to attract investors, lenders and other parties interested in the companies financial status.The Balance SheetA report that shows the company's financial position at a specified point in time and lists the company's resources (assets), obligations (liabilities), and net ownership interest (owner's equity).Notes to the Financial StatementProvide information on the accounting assumptions used in preparing the statements and also provide supplemental information not included in the statements themselves.An audit performed by accountants from outside a company that increases the reliance that users can place on the information in the companies financial statements External Audit Report RelevantInformation that is provided on a timely basis that can be used to assess the past and project the future.ReliableInformation that represents exactly what it is supposed to represent.ComparabilityAbility to compare the accounting information of different companies because they use the same accounting principles.

ConservatismThe practice of recognizing all losses but not recognizing gains until they are certain.MaterialityThe concept that weighs whether or not a certain dollar amount is large enough to make a difference to anyone.current assetscash and other assets expected to be exchanged for cash or consumed within a year What are the most common current assets?cash, accounts receivable, inventory long term assetsassets that are expected to be used in business operations for longer than one year.What are the most common long term assets?Property, plant and equipment intagible assetscompanies report the intangibles that they have purchased from other companies but not the intangibles that they have developed themselves The first item in a U.S. balance sheet isusually cash; companies located in non-U.S. countries often list long-term assets first.Companies usually provide balance sheetsFor at least two years, with the statements shown in comparative, side-by-side format regognitionRecognition is the process of condensing all estimates and judgments into one number and reporting that one number in the formal financial statements What is the accounting equation?Assets = Liabilities + Owner's Equity What is a company's asset mix?The proportion of total assets in each asset category and is largely determined by the industry in which the company operates.What is the financing mix?The result of management decisions Net Incomethe difference between total revenue and total expenses when total revenue is greater What is the best measure of sustainable profitability income generated from continued operations Gross ProfitThe difference between the selling price of the product and the cost of the product.Operating IncomeGross profit minus all other expenses except for interest and taxes Income from continuing operationsoperating income minus interest expense, minus income tax expense, and plus or minus other miscellaneous revenue and expense items, and gains and losses from peripheral transactions and events

Comprehensive incomenet income plus or minus adjustments for changes in company wealth stemming from changes in certain exchange rates, interest rates, or financial instruments' values.The primary categories of income statement items revenues, expenses, gains, and losses.Income statement items that do not relate to a company's continuing operations income from discontinued operations and extraordinary items.single-step income statementmerely groups all of the revenues and all of the expenses, and reports the overall difference as net income.multiple-step income statementemphasizes the presentation of gross profit and operating income.Revenue should be recognized whenvalue has been delivered to customers which is typically only after the required work has been performed and after the collection of cash is reasonably assured.Expanded Accounting EquationAssets = Liabilities + Paid-in Capital + (Revenues − Expenses − Dividends) An important use of an income statementforecast income in future periods. Good forecasting requires an understanding of what underlying factors determine the level of a revenue or an expense.Operating cash flowUseful in selected cases when net income does not give an accurate reflection of a company's performance. operating activities are those activities that enter into the calculation of net income. Net cash provided by operating activities is the "bottom line" of the cash flow statement.InvestingPrimary investing activities are the purchase and sale of land, buildings, and equipment.FinancingFinancing activities involve the receipt of cash from, and the repayment of cash to, owners and creditors.Non-cash investing and financingtransactions include the purchase of long-term assets in exchange for the issuance of debt or stock.The six steps for preparing a statement of cash flows 1) Compute the change in the cash balance.2) Convert the income statement from an accrual-basis to a cash-basis summary of operations.3) Analyze the long-term assets to identify the cash flow effects of investing activities.Analyze the short-term and long-term debt and the stockholders' equity accounts to determine the cash flow effects of any financing transactions.Prepare the formal statement of cash flows.Disclose any significant investing or financing transactions that did not involve cash.