Government Test Study Guide

Regulations and Rules in the Accounting Practice:  There are basic accounting     rules that all organizations must follow.  The purpose of these rules is to make sure that sound accounting principles are being followed.  There are private entity rules and governmental entity rules.  Which of the following acronym would best describe these regulations and rules

Statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP), which refers to a set of rules, standards, and practices. They are used throughout the accounting industry to prepare and standardize financial statements that are issued and help investors and creditors compare companies within the same industry. Companies are expected to follow generally accepted accounting principles when they report their financial information. GAAP affects the measurement of economic activities and the disclosure of information about activities. It also affects the preparation and summarization of economic information, and the record keeping of measurements at average intervals.

6. (TCO 6) Which one of the following is a source of information used to prepare the budgeted income statement?

Slide 3: Financial statements for public companies are compiled according to Generally Accepted Accounting Principles, or GAAP. This is mandated by the Securities and Exchange Commission as a means of ensuring that companies produce these statements consistently. That allows investors to easily compare different companies when they are

Broader accountability should be fulfilled by the government as compared to profitable entities. Government accounting standards are made to provide budgetary information to the users. For example, property tax is a need of government only. It is required by the government to provide information about property tax in its financial statements. Pension requirement for government and other business entities is same in the reporting standards.

The mutual set of accounting criteria used to develop medical centers financial statements are known as generally accepted accounting principles (GAAP). GAAP are a mixture of respected criteria created by Securities and Exchange Commission (SEC) and accountants. The SEC has authority granted by The Securities Act of 1933 and the Securities Exchange Act of 1934, to determine reporting and disclosure requirements. Oversight is the general functions of the SEC, granting the Governmental Accounting Standards Board (GASB) to determine the standards. Generally accepted accounting practices are required for accountant to follow and medical centers to use so medical centers and provide investors with a minimal

In the U.S., Generally Accepted Accounting Principles are accounting rules used to prepare, present, and report financial statements for a wide variety of entities, including publicly traded and privately held companies, non-profit organizations, and governments. The term is usually confined to the United States; hence it is commonly abbreviated as US GAAP or simply GAAP. However, in the theoretical sense, Generally Accepted Accounting Principles encompass the entire industry of accounting, and not only the United States. Outside the academic context, GAAP means US GAAP.

Generally Accepted Accounting Principles (GAAP) are the various methods, rules, practices, and other procedures that have evolved over time in response to the need to regulate the preparation of financial statements. They are primarily set by the Financial Accounting Standards Board (FASB), a private sector entity with representatives from companies that issue financial statements, accounting firms that audit those statements, and users of financial information. Other bodies that contribute to

The author begins the chapter by stating that the organization managers are responsible for creating financial statements and to design internal control systems. These financial statements should include all of the organization transactions and current economic conditions of both assets and liabilities. Once a financial statement is complete the external auditor reviews the report and provides opinions on the reliability of the report and the effectiveness of the internal control. The external auditors determine if the financial statements are done correctly or not and in accordance to GAAP. If yes, the auditor issues an unqualified audit report that states that the company properly completed the financial statement. If the auditor believes that it was not done properly they issue an adverse report that states that the financial statement was not presented properly. The auditor communicates the results to interested parties.

Financial statements are used by company owners to evaluate the how the company is doing, also by investors for making decisions about when to invest or when to sell their shares, by lenders or banks in order to make decisions about credit worthiness of the company. Financial statements can be use effectively when the user understands the roles of the financial statements preparer and the auditors. A company’s financial statements represent the management. When using management’s statements, a user need to understand that the preparation of the financial statements requires management to make substantial accounting estimates and decisions, also in order to choose from among several alternative accounting principles and methods that are most appropriate within the guidelines of generally accepted accounting standards (GAAP).

a. The auditor cannot say the financial statements are correctly stated. Things could change during the audition period. And there are some parts that auditor does not responsible for.

For an organisation, financial statements are the principal method in which they can make available financial information to a wide range of entities, who use this information to assess a company’s current condition, prospects for growth and potential financial risks. Therefore, financial statements provide important information to a wide number of users both internal and external in terms of making economic decisions, these are known as stakeholders (Reference). There are a number of different stakeholders who use accounting information and they all have specific requirements when it comes to their information needs, the following are types of stakeholders in a company; owners, investors, management, lenders, trade creditors and suppliers, the government, employees, customers and the general public. In terms of internal and external there are certain key users of this information.

Also, the company should continue its activities according to the rules and requirements of GAAP (General Accepted Accounting Principles).

4) To determine the effect of Creative Accounting on External Auditors decisions as to the forming of an opinion on the Financial Statement

Accounting is the art of recording transactions in the best manner possible. Accounting Standards are the policy documents issued by recognized expert accountancy bodies relating to various aspects of measurement, treatment