Week 1

Question 1

Two Systems of Accounting

Answer 1

US GAAP and IFRS. You can not compare companies between different accounting standards without converting one.

Question 2

W-2

Answer 2

Wage and tax statement

Question 3

1099 DIV

Answer 3

A record that a company or other entity paid you dividends

Question 4

Lifetime Learning Credit

Answer 4

If you are registered for a 4-year degree, you get a couple thousand dollars off your taxes

Question 5

How C-Corporations are taxed

Answer 5

They are taxed twice, paying taxes on their profits and then paying taxes on dividends

Question 6

Exchange Transaction

Answer 6

Where two parties each receives and sacrifices something of approximate value

Also known as economic substance

Question 7

24/7 Earning Cycle

Answer 7

Day: work
Night: investments

Investing allows you to make money while you sleep while paying less in taxes.

Question 8

Goodwill

Answer 8

Difference between debit and credit. Gets added to debit

Question 9

Where do securities get their value?

Answer 9

Securities do not have value, the assets that back them do.

Question 10

Sales equation

Answer 10

Units x Price

Question 11

Debit

Answer 11

(In) Assets and expenses

Question 12

Credit

Answer 12

(Out) Liabilities and income

Question 13

Asset

Answer 13

Future economic benefit

Question 14

Liability

Answer 14

Present obligation for present or past events

Question 15

Equity

Answer 15

Residual interest

Question 16

Expense

Answer 16

Money going out

Question 17

Income

Answer 17

Money coming in

Question 18

Cash Accounting

Answer 18

a major accounting method that recognizes transactions only when cash is exchanged

You can not have accounts receivable or accounts payable on a cash basis system

Question 19

Accrual System

Answer 19

a major accounting method where revenue is reported when earned and expenses are reported when incurred

This system is a two entry system:

• First entry is when you get the bill
• The second entry is when you pay the bill

Question 20

The Five Different Financial Statements

Answer 20

• Balance Sheet
• Income Statement
• Cash Flow Statement
• Statement of changes in equity
• Notes: includes all accounting principles

Question 21

US public companies have to submit financial statements using what accounting system?

Answer 21

They must use US GAAP, but can also include IFRS

Question 22

US private companies have to submit financial statements using what accounting system?

Answer 22

US GAAPP, IFRS, or SMEs

Question 23

Non-US public companies have to submit financial statements using what accounting system?

Answer 23

IFRS

Question 24

Non-US private companies have to submit financial statements using what accounting system?

Answer 24

IFRS or SMEs, but could also include statutory reporting

Question 25

F20

Answer 25

Allows foreign companies doing business in the US to file with the SEC without having to convert their financial statements from IFRS

Question 26

Who is responsible for financial statements in a firm?

Answer 26

All management

Question 27

Types of reports auditors can issue

Answer 27

Clean Unqualified

Qualified

Adverse

Disclaimer

Question 28

Clean Unqualified

Answer 28

Auditors say everything is good with the report

Question 29

Qualified

Answer 29

Auditors say that there are some discrepancies in the financial statements

Question 30

Adverse

Answer 30

Auditors say the financial reports contain gross misstatements and have the potential for fraud

Question 31

Disclaimer

Answer 31

Auditors are distancing themselves from providing any opinion at all related to the financial statements

Question 32

Accounting Equation

Answer 32

A = L + EQ