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Ch 1 Notes for Quiz 1

by: Shannon Panagopoulos

Ch 1 Notes for Quiz 1 ACC 250

Marketplace > DePaul University > ACC 250 > Ch 1 Notes for Quiz 1
Shannon Panagopoulos
GPA 3.52
Preparing for an Accounting Career
Larry Fee

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Preparing for an Accounting Career
Larry Fee
Study Guide
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This 6 page Study Guide was uploaded by Shannon Panagopoulos on Sunday October 11, 2015. The Study Guide belongs to ACC 250 at DePaul University taught by Larry Fee in Fall 2015. Since its upload, it has received 101 views.


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Date Created: 10/11/15
ACC 250 quiz 10615 Ch 145 Ch1 Accounting A Hot Career Path As a CPA you can work just about anywhere many different acc jobs Some audit worlds largest companies some prepare nancial reports of not for pro t organizations some assist individuals with their tax returns some work for themselves About Accounting pg 2 ACC De nitions Webster the principle or practice of systematically recording presenting and interpreting nancial accounts AAA the process of identifying measuring and communicating economic info to permit informed judgements and decisions by the users of the info AICPA the art of recording clas sifying and summarizing in a signi cant manner and in terms of money transactions and events which are in part at least of a nancial charter and interpreting the results thereof Accounting Principle Board accounting is a service activity its function is to provide quantitative info primarily nancial in nature about economic entities that is intended to be useful in making economic decisionsin making reasoned choices among alternative courses of action Common thread in de nitions IDENTIFYING SYSTEMATICALLY RECORDING MEASURING VERIFYING ANALYZING INTERPRETING PRESENTING COMMUNICATING 1 IDENTIFYING amp RECORDING or deciding what info to use and recording it in some form 2 MEASURING or quantitative analysis 3 SUMMARIZING or capturing the essential details In the info 4 VERIFYING or providing an independent veri cation of the info 5 ANALYZING amp INTERPRETING or drawing the meaning from the info 6 PRESENTINGCOMMUNICATING the info to users or the the info 7 DELIVERING comprehensive accurate and reliable info to users Beyond Crunching Numbers pg3 Accountants are in the information business they provide or verify many different kinds of inf quot provide info in the same sense that some accountants work inside organizations producing nancial statements income statements or pro t and loss statements balance sheets statement of cash ow and statements of capital accounts and shareholder39s equity other accountants are independent auditors who review analyze and verify the nancial statements and other info produced by the organization this information is used by a variety of decisionmakers ie CEOCFO of a Fortune 500 Company small business owner head of gov39t agency board of directors in nonpro t organization entrepreneur starting a new co etc The value of this info depends on the competence knowledge skills experience and most importantly the integrity of the accountant All users of info depend on their accountant for accurate complete and useful info to help make decisions Accountants are trusted advisors who are indispensable to the management and operations of thousands of companiesbusinessesgov39t agenciesother enterprises Wo accounting systems and accountants there wiuld be no way for a business to measure their nancial performance benchmarking their performance against the competition or communicating their nancial results to shareholders and regulators To Whom are Accountants Accountable Pg5 accountable to public just as much as their clients investors company managers and workers banks and other lenders rely on accoun ng39 NONPROFIT ORGANIZATION accountants produce or verify information ex the organization39s spending to alleviate povertyetc Accountantsampauditors produce or verify info produced by federal state or local government agencies that is needed by the agency executives and staff political leaders and the public state legislature governor39s of ce cities and countries the public and agency of cials themselves all have a need to know the budget of a state transportation agency for funding highways and roads Accountino The Profession has formal quali cations requires specialized education and knowledge requires continuing education has a speci c and practical purposesuch as providing accounting services includes membership in a professional society such as the AICPA has a system of selfregulation based on a code of ethics is subject to government review and licensing serves the public interest CPA Desionation not all accountants are CPAs CPAstatelicensed professional who has passed the uniform CPA examination amp has met all speci c education requirements Many seek a CPA because it opens up more career opportunities ex only CPAs can audit companies CPA may mean more CPAs earn the recognition of peers and promote public trust AICPA develops standards for audit and other services provided by CPAs creates and grades the CPA exam monitors and enforces compliance with the profession39s audit technical and ethical standards Many CPAs work for pro tmaking enterprises including public accounting rms among other function public accounting rms audit the books of public companies and are regulated by the SEC and other regulators CPAs also work for private companies that are subject to various types of government regulations CPAs also work for the regulators gov t agencies whose responsibilities include regulation of the private sector CPAs also work for nonpro t and other organizations Some CPAs start their own business providing accounting services to clients GAAP nancial statements are based on GAAPthe authoritative rules for preparing and presenting nancial statements and for the disclosure of nancial info pubic companies assumed to follow gaap in their nancial reporting unless they say otherwise many large companies maintain 2 sets of books due to the differences in gaap amp federal tax code reporting standards 1 for gaap reporting 1 for tax reporting if a company is not using gaap it is incumbent on the company to make clear that it is using a different form of reporting that is less comprehensive than gaap Ex a small company might use a tax basis for their nancial statements based on the rules of the federal tax code for preparing and preventing nancial info can use 1 set of books FASBFinancial accounting standards board is the primary sector authority responsible for issuing and updating pronouncements on gaao SEC larger scale has broad authority over acc and n Reporting standards for publicly traded companies includes authority over FASB GAAP uses cost basis if accounting IFRS international nancial reporting standards is used by many countries and is based on a form of fair value accounting SEC is considering whether to require US companies to use IFRS Other Functions Accountants also manage the internal nancial operations of a business cash receiptscash payments AR AP payroll purchases inventory and property records determine how to measure and record the costs of products and how to allocate cost of products and how to allocate costs within a company prepare reports for the managers of a business such as an analysis of a company39s pro ts or its sales volume prepare an organization39s federal and state income tax returns as well as its sales payroll and property taxes Auditing 2 types internal amp Independent lnternal auditor is intended to help an organization accomplish its objectives by bringing a systematic disciplined approach to evaluate and improve the effectiveness of risk management control and governance processes are employed by companies or other organizations to provide counsel for improving controls processes and procedures examine and evaluate a company39s nancial and informational systems management procedures and internak controls to ensure that records are accurate and controls are adequare suggest ways to reduce costs enhance revenues and improve pro ts review company operations evaluating their ef ciency effectiveness and compliance with corporate policies and gov39t regulations help to provide internal training in risk management fraud management and other issues they educate management and the company39s board on critical issues lndependent auditor determines whether an organization39s economic activities are fairly re ected in its nancial statements audit requires a thorough understanding of the company39s strategic goals business plans operations nancial structure internal controls and aspects of the organization conduct a detailed examination of an organization39s internal controls including the procedures for authorizing transactions safeguarding assets and ensuring the accuracy of nancial records anayze nancial documents check bank balances review inventor physically inspect assets check depreciation schedules examine contracts and review minutes of meetings discuss a company39s nancial conditions operations and business plans with its directors managers and others audit work ends in the issuance of an audit report auditor issues an opinion in the fairness of the nancial statement process known as an attest function SEC requires the nancial statements of all publicly help US companies to be audited every year by an independent auditor SEC also requires the annual report of every publicly held corporation to contain a quotReport of Independent Public Accountantsquot standard audit report states that the goal of the audit is quotto obtain reasonable assurance that the nancial statements are free of material misstatementquot and that the audit was performed quotin accordance with generally accepted auditing standards Audits by CPAs have become part of real estate and other commercial agreementsm as well as many bank loan requirements CPAs also conduct other types of audits like tax or environmental audits Assurance Accountants also provide assurance services independent professional services that improve the quality of information or its context for business or individual decisionmakers Assurance services are generally distinct from consulting services CONSULTING SERVICES generally involves providing advice to clients or creating internal systems such as a new or upgraded computer system ASSURANCE SERVICES include nancial forecasts and projections on internal controls ecom system reliability comprehensive risk assessments business performance measurement policy compliance and mergers and acquisitions Tax Tax servicesgrowth area for many acc rms Factors of increased demand new tax laws and regulations continuous changes in existing laws the globalization of business the increasing complexity of the business environment amp others Basic service preparation of tax returns for corporationsother organizationsindividuals all tax payers must keep records for their tax returns all large companies must 2 sets of books accamptax tax accountants review those books and reconcile the differences btwn tax and accoun ng 1 reason is to calculate an organization39s provision for income taxes which is re ected on its nancial statements another area where tax is signi cant is in compensation Other Functions Industry Specialization Where Accountants Work Public Accounting Corporate Accounting Gov t Accounting Nonpro t Organizations TeachingL DONECOVERED IN CH 4quot


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