acct exam 1

acct exam 1 - ACCT2000 Exam1 FieldsofACCT...

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ACCT 2000 17:08 Exam 1 Fields of ACCT 1. Financial accounting Focus -> external reporting 4 financial statements balance sheet income statement - profit statement of cash flows statement of owners equity external users  creditors – ability to pay investors government – IRS, SEC 2. Managerial accounting focus on internal reporting 3. Taxation income - individual estate gift property
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sales  excise 4. Auditing external – CPA firm internal – works directly for company 5. Not-for-profit municipalities charities organizations  FASB = Financial Accounting Standard Board -> GAAP Generally Accepted Accounting  Principles SEC – Securities and exchange commission Administrates the stock exchange Monitor financial statements Issue certain procedures you have to follow AICPA – American Institute of Certified Public accounting Governing Body administrative arms Gives the CPA EXAM CPE – keeps studying IRS – Internal Revenue Service Administer tax law
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Collection of tax Less than 2% get audited Ch 2 1.Underlying theory of GAAP 10 concepts and principles (assumptions) 2. Financial stats balance sheet income stat Underlying Theory 1. Historic Cost assets must be reported in balance sheet at original cost objective and verifiable land is asset bought 20 years ago now worth 4x market value is not objective, not verifiable 2. Economic Entity the business unit is separate and distance from other business units and from its owner maintain separate records buy a new computer for business buy a DVD player for house
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3. Stable dollar assumption U.S. $ is stable in value inflation is ignored US dollar is unit of measure “functional currency” – currency used for accounting ex. Yen -  Japan 4. Materiality – significance quantitative relative dollar amount ex. $10 to $1 billion (immaterial) qualitative relative importance ex. Employee strike (material) vs. bookkeeper is ill (immaterial) 5. Full disclosure if info might influence the user’s decision making process, then disclose it! parenthetically in body of financial
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acct exam 1 - ACCT2000 Exam1 FieldsofACCT...

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