Exam 1 Review Flashcards
what is an adjusting entry?
identifies debit and credit
What time period does balance sheet measure?
specific point in time
What time period does income statement measure?
period of time
What time period does statement of stockholders equity
period of time
An example of an adjusting entry would include
income statement account and a balance sheet account
Fraud Triangle
Opportunity, Pressure/Motive, Rationalization
Form of a business organization that is legally separate from its owners
Corporation
Why do we have deferred revenue ?
Deferred revenue is a liability on companies balance sheet that represents a prepayment by its customers for goods or services that have yet to be delivered
What is the body of rules and procedures that guide
GAAP
Reason why the bank statement would not equal the company books
Outstanding checks, bank service charges, company error
Separation of duties?
Having more than one person required to complete a task. used by organizations to prevent fraud
Which accounts are increased on the debit side and decreased on the credit side?
a. Assets, expenses, dividends
b. Liabilities, stockholders equity accounts
What is the role of the PCAOB
fine people and put them in jail
made after SOX act
Oversee audits
Protect investors
Further public interest through preparation of informative and accurate accounting statements
Different types of activities?
Operating, financing, investing
IRS
Internal Revenue service
SEC
security and exchange commission
IASB
International accounting standard board
FASB
Financial accounting standard board
What are detective controls?
defined to find errors or problems after the transaction has occurred
Role of independent auditors
Examines the company’s financial statements and provides a written report that contains an opinion as to whether the financial statements are fairly stated and comply with GAAP
In what order are the financial statements prepared?
Trial Balance
Adjusted trial balance
income statement
balance sheet
statement of stockholders equity
