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ACCT203 > CH 9: Communicating and Analyzing Accounting Information > Flashcards

CH 9: Communicating and Analyzing Accounting Information Flashcards

1
Q

Sabarenes oxley act

A

A law that strengthens financial reporting and corporate governance for public companies

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2
Q

Corporate governance

A

Procedures to ensure that the company is managed in the interest of its shareholders

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3
Q

Fraud triangle

A

Opportunity, pressure, rationalization

3 conditions necessary for good corporate governance

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4
Q

Regulators

A

sec, fasb, pcaob

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5
Q

protects investors and maintains the integrity of the securities market

A

SEC

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6
Q

sets GAAP

A

fasb

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7
Q

sets auditing standards for independent auditors (CPAs)

A

pcaob

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8
Q

CEO

A

highest officer of the company

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9
Q

CFO

A

highest financial accounting office

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10
Q

have professional responsibility for the accuracy of the information

A

Accounting staff

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11
Q

Board of directors

A

Oversees the CEO/other senior management and assures that interests of shareholders are being served

Elected by stockholders

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12
Q

The big 4

A

EY, deloitte, PwC, KPMG

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13
Q

Institutional investor

A

pension, mutual, endowment and other refunds that invest on the behalf of others

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14
Q

private investor

A

Individuals, including large individual investors such as venture capitalists, who purchase shares in companies

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15
Q

Lenders

A

Suppliers, banks, commercial credit companies, and other financial institutions that lend money to companies

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16
Q

Material Amount

A

Amount large enough to influence users’
decisions

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17
Q

CEO and CFO

A

Management primarily responsible for
accounting information

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18
Q

Financial Analyst

A

An individual who analyzes financial
information and provides advice

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19
Q

Auditor

A

An independent party who verifies financial
statements

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20
Q

Institutional investors

A

Managers of pension, mutual, endowment,
and other funds who invest on the behalf of
others

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21
Q

independent auditors

A

The independent auditors provide and opinion with respect to the overall fairness of the financial statements

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22
Q

SEC regulation FD

A

requires that
companies provide all investors equal access to all important
company news.

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23
Q

Managers and other insiders are prohibited from trading their
company’s shares based on nonpublic (insider) information so that no
party benefits from early access.

A

true

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24
Q

Public companies announce quarterly and annual earnings through a

A

press release

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25
Q

The annual reports for privately

A

e simple documents
including:

  1. Four basic financial statements.
  2. Related notes (footnotes).
  3. Report of Independent Accountants (Auditor’s Opinion) if the
    statements are audited.
26
Q

The annual reports of public companies (called Form 10-K)

A

Item 1. Business: Description of business operations and strategy.

Item 7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations: Management’s views on the causes of its
successes and failures during the reporting period and the risks it faces in
the future.

Item 8. Financial Statements and Supplemental Data: The four basic
financial statements and related notes, the report of management, and
the auditor’s report.

27
Q

Comparative financial statements

A

. To allow users to compare performance from period to period,
companies report financial statement values for the current period and one or more prior periods. (2 years
for balance sheets, 3 years for all other statements

28
Q

Additional subtotals and classifications in financial statements

A

. You should not be confused when you
notice slightly different statement formats used by different companies.

29
Q

Additional disclosures.

A

Most companies present voluminous notes that are necessary to understand a
company’s performance and financial condition.

30
Q

gross profit percentage

A

gross profit/net sales

measures a company’s ability to charge premium prices and produce goods
and services at low cost

31
Q

Cash Flows from Operating
Activities.

A

This section
reports cash flows associated
with earning income.

32
Q

Cash Flows from Investing Activities.

A

Cash flows in this section are associated
with the purchase and sale of (1)
productive assets (other than
inventory) and (2) investments in other
companies

33
Q

Cash Flows from Financing Activities.

A

These
cash flows are related to financing the business
through borrowing and repaying loans from
financial institutions, stock (equity) issuances
and repurchases, and dividend payments.

34
Q

return or assets (ROA)

A

net income/ average total assets

35
Q

Financial institution or supplier that lends money to the company.

A

Creditor

36
Q

Chief executive officer and chief financial officer who have primary responsibility for the information presented in financial statements

A

CEO and CFO

37
Q

Manager of pension, mutual, and endowment funds that invest on the behalf of others.

A

Institutional investor

38
Q

Securities and Exchange Commission, which regulates financial disclosure requirements.

A

SEC

39
Q

A company that gathers, combines, and transmits (paper and electronic) financial and related information from various sources.

A

Information service

40
Q

Adviser who analyzes financial and other economic information to form forecasts and stock recommendations.

A

Financial analyst

41
Q

Individual who purchases shares in companies.

A

Private investor

42
Q

Independent CPA who examines financial statements and attests to their fairness.

A

Independent auditor

43
Q

Report of special events (e.g., auditor changes, mergers) filed by public companies with the SEC.

A

Form 8-K

44
Q

Brief unaudited report for quarter normally containing summary income statement and balance sheet.

A

Quarterly report

45
Q

Quarterly report filed by public companies with the SEC that contains additional unaudited financial information.

A

information. Form 10-Q

46
Q

Written public news announcement that is normally distributed to major news services.

A

Press release

47
Q

Annual report filed by public companies with the SEC that contains additional detailed financial information.

A

Form 10-K

48
Q

Report containing the four basic financial statements for the year, related notes, and often statements by management and auditors

A

Annual report

49
Q

1) Summarized financial data for 5-year period.

A

annual rep, form 10k

50
Q

Notes to financial statements.

A

annual rep, form 10k

51
Q

The four basic financial statements for the year.

A

annual rep, form 10k

51
Q

Description of those responsible for the financial statements.

A

annual rep, form 10k

52
Q

) Initial announcement of hiring of new vice president for sales.

A

press release

53
Q

Complete quarterly income statement, balance sheet, and cash flow statement.

A

10-q

53
Q

Initial announcement of quarterly earnings.

A

press release

54
Q

Announcement of a change in auditors.

A

8-k

55
Q

Detailed discussion of the company’s competition.

A

Form 10-K

55
Q

Summarized income statement information for the quarter.

A

Quarterly report

56
Q

expenses

A

inc statement

57
Q
A

ACCT203 (10 decks)

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