Review questions 2-1 2-16

Review questions 2-1 2-16 - Chapter 2 Review Questions Pgs....

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Chapter 2 Review Questions Pgs. 53, 57, 69, 71 2-1 What roles do GAAP, the FASB, and the PCAOB play in the financial reporting activities of public companies? GAAP (Generally Accepted Accounting Principles)- are the guidelines used to prepare and maintain financial records and reports. FASB (Financial Accounting Standards Board)- authorize accounting practices and procedures, accounting profession’s rule-setting body PCAOB (Public Company Accounting Oversight Board)- not-for-profit organization that oversees auditors of public corporations. Charged with protecting the interests of investors and furthering the public interests in the preparation of informative, fair, independent audit reports 2-2 Describe the purpose of each of the four major financial statements Income Statement- provides a financial summary of the firm’s operating results during a specified period. Income, (Expenses) Balance sheet- Presents a summary statement of the firm’s financial position at a given point in time. Statement of Retained Earnings- reconciles the net income earned during a given year, and any cash dividends paid, with the change in retained earnings between the start and the end of that year Statement of Cash flows- The summary of the cash flows over the period of concern. Provides insight into the firm’s operating, investing and financial cash flows and reconciles them with the changes in its cash and marketable securities during that period. 2-3 Why are the notes to the financial statements important to professional security
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Review questions 2-1 2-16 - Chapter 2 Review Questions Pgs....

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