🏷️ LIMITED TIME OFFER: GET 20% OFF GRADE+ YEARLY SUBSCRIPTION →
Log in
HomeStudy Guides420,000US230,000

ACCT 212 Study Guide - Quiz Guide: Internal Revenue Service, Financial Accounting, Financial Statement

8 views13 pages
amramr328
25 Mar 2023
School
Liberty University
Department
Accounting
Course
ACCT 212
Professor

For unlimited access to Study Guides, a Grade+ subscription is required.

Document Summary

Lenders (creditors) loan money or other resources to an organization. Banks, savings and loans, co-ops, and mortgage and finance companies are lenders. Lenders look for information to help them assess whether an organization is likely to repay its loans with interest. Shareholders (investors) are the owners of a corporation. They use accounting reports in deciding whether to buy, hold, or sell stock. Directors are typically elected to a board of directors to oversee their interests in an organization. Since directors are responsible to shareholders, their information needs are similar. External (independent) auditors examine financial statements to verify that they are prepared according to generally accepted accounting principles. Nonexecutive employees and labor unions use financial statements to judge the fairness of wages, assess job prospects, and bargain for better wages. Regulators often have legal authority over certain activities of organizations. Internal revenue service (irs) and other tax authorities require organizations to file accounting reports in computing taxes.

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers

Related Documents

ACCT 212 Chapter Notes - Chapter 1: Enterprise Risk Management, Management Accounting, Cost Accounting
amramr328
ACC-1A Lecture Notes - Lecture 1: Financial Statement, Accounting
lemonwasp425
BUS 251 Lecture Notes - Lecture 1: Canada Revenue Agency, Financial Statement, Cash Flow Statement
rosebutterfly429

Related Questions

QUESTION 1 The knowledge of financial accounting can assist people with decisions such as whether to extend credit to a business. True False 0.2 points Saved QUESTION 2 Employees of a company would not have a reason to use the information provided by financial accounting. True False 0.2 points Saved

QUESTION 3 Financial accounting should be used for assessing the financial health of large organizations only. True False 0.2 points Saved

QUESTION 4 Financial accounting can be helpful for a job candidate who is assessing the financial future of a potential employer. True False 0.2 points Saved QUESTION 5 Lenders might use the information produced by financial accounting when making loan decisions. True False 0.2 points Saved

QUESTION 6 Credit analysts prefer not to use information provided by financial accounting, as it is not accurate. True False 0.2 points Saved

QUESTION 7 Financial accounting is helpful to investment advisors. True False 0.2 points Saved

QUESTION 8 Financial accounting is more useful than managerial accounting. True False 0.2 points Saved

QUESTION 9 The decision to buy or rent equipment is an example of a decision aided by managerial accounting. True False 0.2 points Saved

QUESTION 10 Which of the following statements is true of financial accounting? A. It is used by external parties to make investment decisions. B. It is used to make lease or purchase decisions. C. Managerial accounting is another name for financial accounting, D. It is primarily used to make internal decisions of a business. E. The effectiveness of advertising can be judged using financial accounting. 0.2 points Saved QUESTION 11 The charge for using money over time, often associated with long-term loans, is known as: A. interest. B. principal. C. distribution charge. D. cash dividend. E. preferred dividend. 0.2 points Saved QUESTION 12 Which of the following is a common feature of financial and managerial accounting? A. Both have same objectives B. Both are prepared according to U.S. GAAP C. Both are reported at year end in the annual report D. Both are analyzed by external users while making investment decisions E. Both are used by the management in making decisions 0.2 points Saved

QUESTION 13 Dividends are required to be paid to stockholders on an annual basis. True False 0.2 points Saved

QUESTION 14 An individual who owns one or more shares of stock in a corporation is an owner of that corporation. True False 0.2 points Saved

QUESTION 15 Corporations do not exist as separate legal entities apart from their owners. True False 0.2 points Save Answer

QUESTION 16 It is very difficult to buy or sell ownership shares of a corporation in a stock exchange. True False 0.2 points Saved

QUESTION 17 Stock markets match up investors who wish to buy shares with those who wish to sell them. True False 0.2 points Saved

QUESTION 18 Legal process by which owners of an organization apply to a state government to have it identified as an entity legally separate from its owners is called: A. stocking. B. filling. C. attributing. D. registration. E. incorporation. 0.2 points Saved

QUESTION 19 An advantage of ownership in a sole proprietorship over ownership in a corporation is: A. tax benefits. B. having a board of directors. C. the ability to raise capital through issuance of stock. D. separation of owner and business as legal entities. E. limited liability for debts. 0.2 points Saved

QUESTION 20 Who hires the management of a corporation? A. Stockholders B. Board of directors C. Creditors D. Government E. SEC 0.2 points Saved QUESTION 21 Inventory refers to the: A. excess amount paid for an asset over its fair value. B. intangible assets of a business. C. merchandise bought or manufactured for the purpose of selling. D. amount of net income reinvested by company for future operations. E. revenue generated from investment. 0.2 points Saved QUESTION 22 Investors use financial information to predict whether a: A. company will recruit more employees. B. company's stock price will increase C. company has invested in buildings. D. company will pay salaries. E. company's bond price will increase. 0.2 points Saved

QUESTION 23 Financial accounting can be compared to a portrait. True False 0.2 points Saved

QUESTION 24 Financial statements provide the form and structure for the conveyance of financial information that will create a likeness of the reporting organization. True False 0.2 points Saved

QUESTION 25 The information reported in financial statements must be exact for an investor to make any decision. True False 0.2 points Saved

The following report was drafted on October 25, 2015, by Major,CPA, at the comple-
tion of an engagement to compile the financial statements of AjaxCompany for the fis-
cal year ended September 30, 2015. Ajax is a non-public entity inwhich Major’s child

has a material direct financial interest. Ajax decided to omitsubstantially all of the

disclosures required by generally accepted accounting principlesbecause the financial

statements will be for management’s use only. The statement ofcash flows was also

omitted because management does not believe it to be a usefulfinancial statement.

To the Board of Directors of Ajax Company:

I have compiled the accompanying financial statements of AjaxCompany as of

September 30, 2015, and for the year then ended. I planned andperformed the compila-
tion to obtain limited assurance about whether the financialstatements are free of material

misstatements.

Management is responsible for the preparation and fairpresentation of the financial

statements in accordance with accounting principles generallyaccepted in the United

States of America and for designing, implementing, andmaintaining internal control rel-
evant to the preparation and fair presentation of the financialstatements.

My responsibility is to conduct the compilation in accordancewith Statements on Stan-
dards for Accounting and Review Services issued by the AmericanInstitute of Certified

Public Accountants. It is substantially less in scope than anaudit in accordance with gen-
erally accepted auditing standards, the objective of which is theexpression of an opinion

regarding the financial statements taken as a whole. I have notaudited the accompanying

financial statements and, accordingly, do not express anyopinion on them.

Management has elected to omit substantially all of thedisclosures required by

accounting principles generally accepted in the United States ofAmerica. If the omit-
ted disclosures were included in the financial statements, theymight influence the user’s

conclusions about the company’s financial position, results ofoperations, and cash flows.

I am not independent with respect to Ajax Company. This lack ofindependence is due

to my daughter’s ownership of a material direct financialinterest in Ajax Company.

This report is intended solely for the information and use ofthe board of directors and

management of Ajax Company and should not be used for any otherpurpose.

Major, CPA

Required:

Identify the deficiencies contained in Major’s report on thecompiled financial state-
ments. Group the deficiencies by paragraph where applicable. Do notredraft the

report.

(AICPA, adapted)

17-41

Russ Major, CPA, drafted the following report on October 25,2015 at the completion of the engagement to compile the financialstatements of Ajax Company for the year ended September 30, 2015.Ajax is nonpublic organization in which Major's child has amaterial direct financial interest. Ajax decided to omitsubstantially all of the disclosures required by GAAP becasue thefinancial statements will be only for mangement's use. Thestatement of cash flows was also omitted because management doesnot believe it to be a useful financial statement.

Identify the deficiencies contained in Major's report on thecompiled financial statements. Group the deficiencies by paragraphwhen applicable. Do not redraft the report.

To the Board of Drictors of Ajax Company:

I have complied the accompanying financial statements ofAjax Company as of September 30, 2015, and for the year then ended.I planned and performed the compilation to obtain limited assuranceabout whether the financial statements are free of matrialmisstatements.

A compilation is limited to presenting information inthe form of financial statements. It is substantially less in scopethatn an audit in accordance with generally accepted auditingstandards, the objective of which is the expression of an opinionregarding the financial statements taken as a whole. I have notaudited the accompanying financial statements and, accordingly, donot express any opinion on them.

Management has elected to omit substantially all of thedisclosures required by generally accpeted accounting principles.If the omitted disclosures were included in the financialstatements, they might influence the user's conclusions about theCompany's financial position, results of operations, and changes infinancial position.

I am not independent with respect to Ajax Company. Thislack of of independence is due to my child's ownership of amaterial direct financial interest in Ajax Company.

This report is intended solely for the information anduse of the Board of Directors and management of Ajax Company andshould not be used for any other purpose.