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Accounting Test Review

In: Business and Management

Submitted By msze
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Chapter 5- Regulators
Securities and Exchange Commission- protects investors and maintains integrity of the securities market- Oversees FASB and PCAOB FASB- Financial Accounting Standards Board- sets GAAP PCAOB- (public company oversight board) - sets auditing standards for CPA's
Management of a company has responsibility for financial statements and related disclosures
Board of Directors (audit committee) is responsible for ensuring that processes are in place for maintaining the integrity of the company's accounting, financial statement prep, and financial reporting
Independent Auditors (CPA's) present Unqualified (clean) Audits Unqualified/Clean Audit- attests to the fairness of financial statements and related disclosures
Institutional Investors- private and public pension funds, mutual funds, endowment and charitable funds, and trust funds
Private Investors- individuals who purchase shares in the company
Creditors- suppliers and financial institutions that lend money or supplies to the company Other Users of financial info include customers, suppliers, competitors, and employees. Each User evaluates the financial health of companies
Guiding Principles for Communicating Useful Information: Information must be- Relevant - Reliable Consistent - Comparable
All material amounts must be disclosed Conservatism Accounting Method is least likely to overstate Assets and Net Income
Form 10-K Annual Report- includes detailed descriptions of products, development, sales and marketing, manufacturing, competitors, owned and leased properties, and legal contracts
Form 10-Q Quarterly Report- contains unaudited info from the quarterly report Statement of Stockholders Equity, Statement of Cash Flows, Notes to Financial Statements
Form 8-K Current Report- used to report any material not included in 10-K or 10-Q
Classified Balance Sheet-

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