ACCT CH 1 - 4 EXAM REVIEW

The body of rules and procedures that guide the measurement and communication of financial accounting information in the United States is known as:

• Generally Accepted Accounting Principles (GAAP).

• Rules of Financial Reporting (RFR).

• Standards of Professional Compliance (SPC).

• Generally Accepted Auditing Standards (GAAS).

Independent auditors express an opinion on the:

• Quality of the company's products.

• Extent to which financial statements are in compliance with GAAP.

• Accuracy of the amount of income taxes a company owes to the government.

• Well-being and fair treatment of a company's workforce.

The role of the Public Company Accounting Oversight Board is to:

• Ensure that auditors follow a strict set of guidelines when conducting their audits.

• Develop accounting and reporting standards in the United States.

• Assist company management in the case of financial default on debt.

• Advise investors and creditors of companies’ future profit potential.

Which of the following accounts normally has a debit balance?

• Service Revenue

• Accounts Payable

• Deferred Revenue

• Salaries Expense

An expense has what effect on the accounting equation?

• Decrease stockholders' equity

• No effect

• Increase assets

• Decrease liabilities

Which of the following accounts would normally have a credit balance?

• Cash, Repairs and Maintenance Expense, Dividends.

• Accounts Payable, Service Revenue, Common Stock.

• Income Tax Payable, Service Revenue, Dividends.

• Salaries Payable, Deferred Revenue, Delivery Expense.

Ensure that auditors follow strict guidelines when conducting their audits.

• • Financial Accounting Standards Board

• • International Accounting Standards Board

• • Public Company Accounting Oversight Board

• • Securities and Exchange Commission

Independent, private-sector group that is primarily responsible for setting financial reporting rules in the United States.

• • Financial Accounting Standards Board

• • International Accounting Standards Board

• • Public Company Accounting Oversight Board

• • Securities and Exchange Commission

Develop a single set of high-quality, understandable global accounting standards.

• • Financial Accounting Standards Board

• • International Accounting Standards Board

• • Public Company Accounting Oversight Board

• • Securities and Exchange Commission

Enforce proper application of financial reporting rules for companies whose securities are publicly traded.

• • Financial Accounting Standards Board

• • International Accounting Standards Board

• • Public Company Accounting Oversight Board

• • Securities and Exchange Commission