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Finance > Test 1 > Flashcards

Test 1 Flashcards

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1
Q

Securities Act of 1933

A
  • protects investors
  • full disclosure
  • regulates IPOs
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2
Q

Securities Exchange Act of 1934

A

On a continuous basis, reports must be filed with the sec for publicly traded companies
-created SEC

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3
Q

FASB

A

SEC is ultimately responsible for GAAP, but FASB changes rules

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4
Q

Probable future economic benefits obtained or controlled as a result of past business transactions

A

Assets

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5
Q

Obligations to transfer assets or provide services in the future as a result of past business transactions

A

Liabilities

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6
Q

The residual interest in the assets after deducting liabilities

A

Equity

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7
Q

Increases in The equity due to transfers of value to obtain or increase ownership interests (or equity) in it

A

Investments by owners

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8
Q

Decrease in equity resulting from transferring assets, rendering services, or incurrence of liabilities by the enterprise to owners

A

Distribution to owners

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9
Q

The change in equity during a period due to transactions, events and circumstances from non-owner sources

A

Comprehensive income

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10
Q

Inflows and other enhancements of assets or settlements of liabilities from delivering of providing goods, rendering services, or carrying out other activities related to the central operations

A

Revenues

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11
Q

Outflows or consumption of assets or incurrence of liabilities from delivering or providing goods, rendering services, or carrying out other activities related to the central operations

A

Expenses

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12
Q

Increases in equity from peripheral or incidental transactions of an entity

A

Gains

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13
Q

Decreases in equity from peripheral or incidental transactions of an entity

A

Losses

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14
Q

What measurement is used when a company is in liquidation?

A

Current market value

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15
Q

Which measurement is mostly used?

A

Historical cost, because of conservatism

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16
Q

Sarbanes-Oxley Act of 2002

A
  • top level management are ultimately responsible for statements and controls
  • internal controls
  • “Peek-a-Boo” audits auditors
  • Auditors report is required
17
Q

Business Equity

A

-business entity is separate and distinct from the owners of the entity

18
Q

Going concern

A

Business will remain in business for an indefinite period of time

19
Q

Time period

A

Statements are due at the same time every year

  • calendar year ends December 31
  • fiscal year ends a month other than December
20
Q

Monetary unit

A

Standard of measure

-inflation

21
Q

Historical cost

A

Most common

Used because it is objective and determinable

22
Q

Conservatism

A

Choose measurement with the least favorable impact on net income and financial position

23
Q

Realization

A

The point of recognition of revenue

  • point of sale
  • receipt of cash
24
Q

Matching concept

A

Cost recognized when sale is made

25
Q

Consistency

A

Same accounting treatment should be used from period to period
-LIFO/FIFO

26
Q

Full disclosure

A

Reports must disclose all the facts

-notes

27
Q

Materiality

A

Considers relative size and importance of an item to the business entity

28
Q

Transaction approach

A

Record transactions that affect the financial position of the entity

29
Q

LLC

A

Separates personal from business

30
Q

5 statements

A
  • balance sheet
  • statement of stockholders equity
  • income statement
  • statement of cash flows
  • notes
31
Q

Balance sheet equation

A

Assets=liabilities + S.E.

32
Q

What links S.E. to income statement?

A

Retained earnings

33
Q

5 Temporary accounts

A

Income statement:

  • revenues
  • expenses
  • gains
  • losses
  • dividends
34
Q

3 Permanent accounts

A

Balance Sheet

  • assets
  • liabilities
  • S.E.
35
Q

Auditor’s Opinion

A
  • unqualified (most common)
  • qualified
  • adverse
  • disclaimer
36
Q

What is the difference between a 10k and a 10Q?

A

10k is audited and requires 5 year history of financials

37
Q

8-k

A

Report major events- file in 10 days

38
Q

Statement of cash flows

3 sections

A

Operating activities
Investing activities
Financing activities

Finance (7 decks)

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