Chapter 1 - Class

Question 1

An individual or corporation that legally owns a particular property without managing it

A reason why auditors are needed in the Industrial Revolution

Answer 1

Absentee Owners

Question 1

The father of double entry bookkeeping (debit/credit)

Answer 1

Luca Pacioli

Question 2

Why do we have the Sarbanes-Oxley Act of 2002? (SOX)

Answer 2

Congress passed the Sarbanes-Oxley Act in an attempt to address a number of weaknesses found in corporate financial reporting in the wake of the recent accounting scandals. Enron and Worldcom

Question 3

In 1970s GAAP was created and AICPA divided to 2 organizations? What 2 orgs?

Answer 3

FASB (Financial Accounting Standard Board ) and ASB (Auditing Standard Board)

Question 4

What principle does FASB (Financial Accounting Standard Board) have?

Answer 4

GAAP (Generally Accepted Accounting Principles) for public companies

Question 5

What principle does ASB (Auditing Standard Board) have?

Answer 5

GAAS (Generally Accepted Auditing Standard) for non public

Question 6

What did Sarbanes-Oxley Act (SOX) create that audits public companies

Answer 6

PCAOB (Public Company Accounting Oversight Board)

Question 7

Who has the ultimate power over accounting standards and lent it to AICPA (American Institute of Certified Public Accountants)

Answer 7

SEC (Securities and Exchange Commission)

Question 8

What occured in 1929 during the Great Depression?

Answer 8

Fraudalent Financial Reporting

Question 9

What occured in 1933 for the economy?

Answer 9

The establishment of SEC