ACCT 002 Lecture Notes - Lecture 26: Mail Order, Cost Driver, Financial Statement

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blackpig616

22 Oct 2020

School

College of The Sequoias

Department

Accounting (ACCT)

Course

ACCT 002

Professor

cooper

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Document Summary

Adheres to legal requirements & follows generally accepted accounting principles. Information may be aggregated or detailed, depending on need. Reporting periods are long or short, depending on need. Not required by law or generally accepted accounting principles. An organization"s basic way of competing to sell products or services. (mail order or retail outlets. ) Cost driver analysis the study of factors that cause or influence costs. (the number of machine hours drives the cost of making a computer. ) Identifies ways to lower cost; lower costs equate to higher profits. Value chain analysis the study of value-producing activities, stretching from basic raw materials to the final customer of a product or service. (procurement, storage, display, and sale to customer. ) A mission is the basic purpose toward which activities are directed, typically ongoing and not precisely measurable. A goal is a definable, measurable target or objective. A strategy is a course of action that will assist in achieving one or more goals.

Related Questions

Chapter 1 Financial Accounting and Accounting Standards

The essential characteristics of accounting are (1) theidentification, measurement, and communication of financialinformation about (2) economic entities to (3) interested partiesFinancial accounting is_________________________________________________________________________________________________________________________________________________.For example accounting information is used by financial accountingto decide whether to invest in the company, evaluate borrowingcapacity to determine the extent of a loan to grant or buy, sell,hold equity and debt instruments.

Managerial accounting is_________________________________________________________________________________________________________________________________________________.

The financial statements* most frequently provided are (1)_______________________ (2) _______________________ (3)_______________________ (4) _______________________ *Also part ofthe financial statements are the notes of the financial statements.Other means of financial reporting that are not financialstatements include the presidentâs letter or supplementaryschedules in the corporate annual report, prospectuses, reportsfiled with government agencies, news releases, managementforecasts, and social or environmental impactstatements.

a) The objectives of Financial Reporting The objective;__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

General-purpose financialstatements_______________________________________________________________________________________________________________________________________________________________.

Entity perspective____________________________________________________________________

Provide decision-useful_________________________________________________________________________________________________________________________________________________.

The accounting profession has developed a set of standards andprocedures called _________________________________________________________

Which of the following represents a form of communicationthrough financial reporting but not through financialstatements?

A. Notes to financial statements. B. Balance sheet. C.President's letter. D. Income statement.

The objective of financial reporting places most emphasison:

A. providing specific guidance related to specific needs. B.providing information to individuals who are experts in the field.C. reporting on stewardship. D. reporting to capital providers.

General-purpose financial statements are prepared primarily for:A. external users. B. auditors. C. internal users. D. governmentregulators.

LO 1.2 Identify the major policy-setting bodies and their rolein the standard-setting process.

Three organizations: Securities and Exchange Commission (SEC):______________________________

American Institute of Certified Public Accountants (AICPA):_______________________________________________________________

Financial Accounting Standards Board (FASB):____________________________

The federal government established the SEC to help develop andstandardize financial information presented to stockholders. Mostcompanies that issue securities to the public or are listed on astock exchange are required to file audited financial statementswith the SEC._____________________________________________________________________________________________________________________________________.

Under the direction of the SEC the__________________________________ was created by the AICPA in_______. It was the first private sector organization that had thetask of setting accounting standards in the United States. ï·___________________________________________________ that narrowedthe wide range of alternative accounting practices then inexistence. In _______. the __________________________________ wasformed to meet the demand for more structured accounting standards.The APB issued pronouncements on accounting principles until_______. the pronouncements where known as _________________, whenit was replaced by the __________________________________ .WheatCommitteeâs recommendations resulted in creation of FASB.

The FASB represents the current rule-making body within theaccounting profession. The mission of the FASB is to establish andimprove standards of financial accounting and reporting for theguidance and education of the public, which includes issuers,auditors, and users of financial information. The FASB differs fromthe predecessor APB in the following ways: a.__________________________________ b.__________________________________ c.__________________________________ d.__________________________________ e.__________________________________

In 1984, the FASB created the __________________________________The purpose of the Task Force is to reach a consensus on how toaccount for new and unusual financial transactions that have thepotential for creating differing financial reporting practices.

Which organization was responsible for issuing AccountingResearch Bulletins? A. The Accounting Principles Board. B. The SEC.C. The Committee on Accounting Procedure. D. The FASB.

The Financial Accounting Standards Board (FASB) was proposed bythe A. Study Group on the Objectives of Financial Statements. B.American Institute of Certified Public Accountants. C. Study Groupon establishment of Accounting Principles (Wheat Committee). D.Accounting Principles Board.

The major distinction between the Financial Accounting StandardsBoard (FASB) and its predecessor, the Accounting Principles Board(APB), is A. a majority of the members of the FASB are CPAs who aredrawn from public practice. B. all members of the FASB possessextensive experience in financial reporting.C. all members of theFASB are fully remunerated, serve full time, and are independent ofany companies or institutions. D. the FASB issues exposure draftsof proposed standards.

The FASB issues two major types of pronouncements: a. When theFASB issues a new standard it is refers as_________________________________to communicate changes to the FASBCodification. They are considered GAAP and must be followed inpractice. o How the FASB has changed US GAAP, including eachspecific amendment to the FASB Codification o Why the FASB decidedto change US GAAP and background information related to the changeo When the changes will be effective and the transition method. b.__________________________________ The SFACs represent an attemptto move away from the problem-by-problem approach to standardsetting that has been characteristic of the accounting profession.The Concept Statements are intended to form a cohesive set ofinterrelated concepts, a conceptual framework that will serve astools for solving existing and emerging problems in a consistentmanner. Unlike FASB statements, the Concept Statements do notestablish GAAP.

Prior to 2009 the FASB issued several type of pronouncementswhich had different levels of authority. The type of pronouncementsare listed in descending order of relative weight of authority theyhad within GAAP

ï· __________________________________

ï· ______________ : these pronouncements refined GAAP byclarifying conflicting or unclear issues relating to previouslyissued standards

ï· ______________ FASB staff issued pronouncements to providemore timely and consistent application guidance and to make narrowand limited revision of standards.

ï· ______________: FASB staff issue these pronouncements toclarify and explain, or elaborate on accounting and reportingproblems. ï· __________________________________

Which of the following is not a publication of the FASB? A.Statements of Financial Accounting Concepts B. Accounting ResearchBulletins C. Interpretations D. Technical Bulletins

_________________________________________________________________________The FASB has established the following procedures for developingaccounting standards. These procedures are used for major projects.Not all of the steps may be necessary for projects focused onnarrower application and implementation issues. Many other stepsare followed during the course of the project that are notspecifically required by the Boardâs Rules of Procedures.

Why was it believed that accounting standards that were issuedby the Financial Accounting Standards Board would carry moreweight? A. The FASB board had a smaller membership. B. The FASBboard members were well-paid. C. The FASB follows due process. D.The FASB board members were CPAs.

GAAP

The FASB developed the Financial Accounting Standards BoardAccounting Standards Codification _____________________________ toprovide in one place all the authoritative literature related to aparticulartopic._________________________________________________________________________________________________________________

Major sources of GAAP:

ï· _______________________________________

Most countries have recognized the need for more globalstandards. _____________________________________________ and U.S.rule-making bodies are working together to reconcile U.S. GAAP withthe IASB _________________________________________

Major challenges in the financial reporting environment.

ï·______________________________________________________________________

carminecrab519

QUESTION 1 The knowledge of financial accounting can assist people with decisions such as whether to extend credit to a business. True False 0.2 points Saved QUESTION 2 Employees of a company would not have a reason to use the information provided by financial accounting. True False 0.2 points Saved

QUESTION 3 Financial accounting should be used for assessing the financial health of large organizations only. True False 0.2 points Saved

QUESTION 4 Financial accounting can be helpful for a job candidate who is assessing the financial future of a potential employer. True False 0.2 points Saved QUESTION 5 Lenders might use the information produced by financial accounting when making loan decisions. True False 0.2 points Saved

QUESTION 6 Credit analysts prefer not to use information provided by financial accounting, as it is not accurate. True False 0.2 points Saved

QUESTION 7 Financial accounting is helpful to investment advisors. True False 0.2 points Saved

QUESTION 8 Financial accounting is more useful than managerial accounting. True False 0.2 points Saved

QUESTION 9 The decision to buy or rent equipment is an example of a decision aided by managerial accounting. True False 0.2 points Saved

QUESTION 10 Which of the following statements is true of financial accounting? A. It is used by external parties to make investment decisions. B. It is used to make lease or purchase decisions. C. Managerial accounting is another name for financial accounting, D. It is primarily used to make internal decisions of a business. E. The effectiveness of advertising can be judged using financial accounting. 0.2 points Saved QUESTION 11 The charge for using money over time, often associated with long-term loans, is known as: A. interest. B. principal. C. distribution charge. D. cash dividend. E. preferred dividend. 0.2 points Saved QUESTION 12 Which of the following is a common feature of financial and managerial accounting? A. Both have same objectives B. Both are prepared according to U.S. GAAP C. Both are reported at year end in the annual report D. Both are analyzed by external users while making investment decisions E. Both are used by the management in making decisions 0.2 points Saved

QUESTION 13 Dividends are required to be paid to stockholders on an annual basis. True False 0.2 points Saved

QUESTION 14 An individual who owns one or more shares of stock in a corporation is an owner of that corporation. True False 0.2 points Saved

QUESTION 15 Corporations do not exist as separate legal entities apart from their owners. True False 0.2 points Save Answer

QUESTION 16 It is very difficult to buy or sell ownership shares of a corporation in a stock exchange. True False 0.2 points Saved

QUESTION 17 Stock markets match up investors who wish to buy shares with those who wish to sell them. True False 0.2 points Saved

QUESTION 18 Legal process by which owners of an organization apply to a state government to have it identified as an entity legally separate from its owners is called: A. stocking. B. filling. C. attributing. D. registration. E. incorporation. 0.2 points Saved

QUESTION 19 An advantage of ownership in a sole proprietorship over ownership in a corporation is: A. tax benefits. B. having a board of directors. C. the ability to raise capital through issuance of stock. D. separation of owner and business as legal entities. E. limited liability for debts. 0.2 points Saved

QUESTION 20 Who hires the management of a corporation? A. Stockholders B. Board of directors C. Creditors D. Government E. SEC 0.2 points Saved QUESTION 21 Inventory refers to the: A. excess amount paid for an asset over its fair value. B. intangible assets of a business. C. merchandise bought or manufactured for the purpose of selling. D. amount of net income reinvested by company for future operations. E. revenue generated from investment. 0.2 points Saved QUESTION 22 Investors use financial information to predict whether a: A. company will recruit more employees. B. company's stock price will increase C. company has invested in buildings. D. company will pay salaries. E. company's bond price will increase. 0.2 points Saved

QUESTION 23 Financial accounting can be compared to a portrait. True False 0.2 points Saved

QUESTION 24 Financial statements provide the form and structure for the conveyance of financial information that will create a likeness of the reporting organization. True False 0.2 points Saved

QUESTION 25 The information reported in financial statements must be exact for an investor to make any decision. True False 0.2 points Saved

beigeant306

2-30	2â30. Multiple Choice Questions
	Select the best answer for each of the following items and give reasons for your choice.
A	a. Which of the following organizations can revoke the right of an individual to practice as a
	CPA?
	(1) The Public Company Accounting Oversight Board.
	(2) The American Institute of Certifi ed Public Accountants.
	(3) The Securities and Exchange Commission.
	(4) The applicable state board of accountancy.
B	b. The AICPA over time has played an important role in standards setting. Which of the following
	standards are currently established by the AICPA?
	(1) Accounting standards applicable to nonpublic companies.
	(2) Auditing standards applicable to audits of nonpublic companies.
	(3) Quality control standards applicable to audits of public companies.
	(4) Standards for reviews of the interim fi nancial information issued by public companies.
C	c. Which of the following does the FASB consider a source of nonauthoritative guidance for
	use when there is no authoritative guidance available?
	(1) The FASB Codifi cation.
	(2) FASB Concepts Statements.
	(3) SEC Rules.
	(4) SEC Interpretive Releases
D	d. Financial statement audits performed under PCAOB requirements are designed to provide
	which type(s) of assurance with respect to the detection of material misstatements due to
	errors or fraud?
		Reasonable	Absolute
1		Yes	Yes
2		Yes	No
3		No	Yes
4		No	No
E	e. A basic objective of a CPA fi rm is to provide professional services that conform with professional
	standards. Reasonable assurance of achieving this basic objective is provided through:
	(1) Compliance with generally accepted reporting standards.
	(2) A system of quality control.
	(3) A system of peer review.
	(4) Continuing professional education.
F	f. Which of the following is not explicitly included in a standard report for a nonpublic
	company?
	(1) The CPAâs opinion that the fi nancial statements comply with generally accepted
	accounting principles.
	(2) That generally accepted auditing standards were followed during the audit.
	(3) That internal control of the client was satisfactory.
	(4) An identifi cation of the fi nancial statements audited.
G	g. The general group of the 10 PCAOB Auditing Standards requires that:
	(1) The auditors maintain an independent mental attitude.
	(2) The audit be conducted in conformity with generally accepted accounting
	principles.
	(3) Assistants, if any, be properly supervised.
	(4) The auditors obtain an understanding of internal control.
H	h. Which AICPA quality control standard would most likely be satisfi ed when a CPA fi rm
	maintains records indicating which partners or employees of the fi rm were previously
	employed by the CPA fi rmâs clients?
	(1) Professional relationship.
	(2) Engagement performance.
	(3) Relevant ethical requirements.
	(4) Monitoring.
I	i. An audit provides reasonable assurance of detecting material:
	Fraudulent Financial	Misappropriation
	Reporting	of Assets
1	Yes	Yes
2	Yes	No
3	No	Yes
4	No	No
J	j. Which of the following is not included in an integrated audit report on the fi nancial statements
	of a public company?
	(1) The report states that the audit was performed in accordance with AICPA standards.
	(2) The report indicates that the fi nancial statements are the responsibility of management.
	(3) The report indicates that the auditors have also audited the effectiveness of the companyâs
	internal control.
	(4) The report is signed in the name of the CPA fi rm.
K	k. Audit fi rms that are subject to inspections by the PCAOB staff include:
	(1) All audit fi rms.
	(2) Audit fi rms that are registered with the SEC.
	(3) Audit fi rms that are registered with the PCAOB.
	(4) Audit fi rms that are registered with a state board of accountancy.
L	l. Which of the following is not a difference noted when comparing the AICPA audit report
	to the international audit report?
	(1) The international audit report may use the phrase âtrue and fair view.â
	(2) The international audit report may be signed using the personal name of the audit
	partner, the audit fi rm, or both.
	(3) The international audit report requires inclusion of the city of the CPA fi rm offi ce that
	performed the audit.
	(4) The international audit report includes an opinion on internal control.

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ACCT 002 Lecture Notes - Lecture 26: Mail Order, Cost Driver, Financial Statement

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