Accounting: 1-3 Fundamentals of Accounting

Front

What does GAAP stand for?

Back

Generally Accepted Accounting Principles

Front

Which organization is responsible for establishing financial reporting standards through GAAP?

Back

Financial Accounting Standards Board (FASB)

Front

What is the main difference between the accrual and cash methods of accounting?

Back

Accrual method records transactions when they are earned or incurred, while cash method records transactions when cash changes hands.

Front

Under the accrual method, when would a company recognize revenue for services that have been paid for in advance?

Back

When the services are fully provided

Front

If a buyer is given 60 days to pay for a car purchased on June 20th, when would the sale be recorded under the cash method?

Back

August 15th

Front

What is the purpose of GAAP?

Back

To provide consistency and clarity in financial reporting

Front

Which organization requires US publicly traded companies to follow/use GAAP? Options: Securities and Exchange Commission (SEC), Internal Revenue Service (IRS), Financial Accounting Standards Board (FASB), American Association of CPAs (AICPA)

Back

Securities and Exchange Commission (SEC)

Front

What is the main purpose of the Securities and Exchange Commission (SEC)?

Back

To regulate the US financial markets

Front

What is the main difference between the cash accounting method and the accrual accounting method?

Back

Cash accounting method records transactions when cash changes hands, while accrual method records transactions when they are earned or incurred.

Front

What are the core principles and assumptions that guide accounting professionals?

Back

General principles and basic assumptions