This website uses cookies to ensure you have the best experience. Learn more

Accounting Chapter 2 Essay

3107 words - 13 pages

Chapter 2

The CPA Profession

← Review Questions

2-1 The four major services that CPAs provide are:

1. Audit and assurance services Assurance services are independent professional services that improve the quality of information for decision makers. Assurance services include attestation services, which are any services in which the CPA firm issues a report that expresses a conclusion about the reliability of an assertion that is the responsibility of another party. The four categories of attestation services are audits of historical financial statements, attestation on the effectiveness of internal control over financial reporting, reviews of historical financial ...view middle of the document...

3. Peer review This practice evaluates the performance of CPA firms in an attempt to keep competence high.

2-3 The Public Company Accounting Oversight Board provides oversight for auditors of public companies, including establishing auditing and quality control standards for public company audits, and performing inspections of the quality controls at audit firms performing those audits.
2-4 The purpose of the Securities and Exchange Commission is to assist in providing investors with reliable information upon which to make investment decisions. Since most reasonably large CPA firms have clients that must file reports with the SEC each year (all companies filing registration statements under the securities acts of l933 and l934 must file audited financial statements and other reports with the SEC at least once each year), the profession is highly involved with the SEC requirements.
The SEC has considerable influence in setting generally accepted accounting principles and disclosure requirements for financial statements because of its authority for specifying reporting requirements considered necessary for fair disclosure to investors. In addition, the SEC has power to establish rules for any CPA associated with audited financial statements submitted to the Commission.

2-5 The AICPA is the organization that sets professional requirements for CPAs. The AICPA also conducts research and publishes materials on many different subjects related to accounting, auditing, management advisory services, and taxes. The organization also prepares and grades the CPA examinations, provides continuing education to its members, and develops specialty designations to help market and assure the quality of services in specialized practice areas.

2-6 Statements on Standards for Attestation Engagements provide a framework for attest engagements, including detailed standards for specific types of attestation engagements.

2-7 The PCAOB has responsibility for establishing auditing standards for public companies, while the Auditing Standards Board (ASB) of the AICPA establishes auditing standards for private companies. The ASB previously had responsibility for establishing auditing standards for both public and private companies. Existing auditing standards were adopted by the PCAOB as interim auditing standards for public company audits.

2-8 Generally accepted auditing standards are ten general guidelines to aid auditors in fulfilling their professional responsibilities. These guidelines include three general standards concerned with competence, independence, and due professional care; three standards of field work including planning and supervision, understanding the entity and its environment, including its internal control, and the gathering of sufficient appropriate evidence; and four standards of reporting, which require a statement as to presentation in accordance with generally accepted accounting principles, inconsistency observed in the...

Other Essays Like Accounting Chapter 2

Bus520 Chapter 15 & 16 Essay

1084 words - 5 pages Chapter 15: Understanding Accounting and Financial Statements Introduction The purpose of this chapter is to identify some of the concepts of Understanding Accounting and Financial Statements in the business world. Learning objectives 1. Explain the functions of accounting, and identify the three basic activities involving accounting. 2. Describe he roles played by public, management, government, and not-for-profit accountants. 3

Development of Accounting Practices in Austrailia

1896 words - 8 pages period, should be stated in the financial report to assist accounting users in making decision. The chapter 2 in the IFRS framework is about reporting entity. The chapter 3 talks about identifying the qualitative characteristics of accounting information such as the comparable, verifiable, timely and understandable of accounting information. In chapter 4, the IFRS framework declared that businesses are underlying the concept of going concern and

Acconting

1248 words - 5 pages CHAPTER 1: Accounting In Action STUDY OBJECTIVES: BY THE END OF THIS CHAPTER STUDENTS SHOULD BE ABLE TO: 1. EXPLAIN THE MEANING OF ACCOUNTING. 2. IDENTIFY THE USERS AND USES OF ACCOUNTING. 3. UNDERSTAND WHY ETHICS IS A FUNDAMENTAL BUSINESS CONCEPT. 4. EXPLAIN THE MEANING OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND THE COST PRINCIPLE. 5. EXPLAIN THE MEANING OF THE MONETARY UNIT ASSUMPTION AND THE ECONOMIC ENTITY

Lean Accounting

1381 words - 6 pages in several different ways. 1. Eliminate Waste One of the most important objectives of lean improvement is to eliminate waste from the non-value-added 1. Chapter 2, “Maturity Path to Lean Accounting”, Practical Lean Accounting. 2. Chapter 1, “Why Is Lean Accounting Important?”, Practical Lean Accounting. activities and processes of the company. Companies can save costs, free up capacity and improve product quality through

Weeklz Cond

570 words - 3 pages in the lecture. * To challenge you. New material is presented in the reviews in order to expose you to as much information as possible about accounting. General Instructions: 1. There are 11 Reviews in total for the semester. Each review relates to the lecture topic of that same number. So, Review 1 is based on Lecture 1 topic etc. 2. Questions in each review will be based on both material covered in the lecture, and additional

Main Financial Statements and Steps in Performing Accouting Analysis

807 words - 4 pages prospects o Conservative accounting • some events are unrecorded (eg .human resources and the effects of inflation) • some events are not capitalized (eg. research expenditures, brand building expenses) o FS include forecast errors • due to complexity of business transactions and lack of predictability of firm’s environment and economy. Book Value + Add adjustments for: (1) noise from accounting rules (2) forecast errors (3

Accounting Theory

1315 words - 6 pages form of accounting that measures profit after allowing for the maintenance of the purchasing power of the shareholders' capital. ‘There are various prescriptive theories of accounting that were advanced by various people on the basis that historical cost accounting has too many shortcomings, particularly in times of rising prices’ (Page 83 Chapter 4). | Theory and Purpose of |CPPA |Maintain purchasing power

The Underrepresentation Of Blacks In The Accounting Profession

3943 words - 16 pages say that blacks can go to black CPA firms to meet such a requirement, but doing that will spur segrega- tion. This has caused blacks to step away from the profession. Furthermore, blacks who are already in the accounting profession believe that there are unfavorable conditions for their success, which is why, according to Fannie Malone and Robert Colson (2001), “Most black accountants have negative view of acceptance by the profession” (p. 2

Int Acct 1midterm

2604 words - 11 pages is useful in assessing cash flow prospects. |   | Instructor Explanation: | General Feedback: Chapter 1 | | |   | Points Received: | 5 of 5 |   | Comments: | | | | Question 2. | Question : | (TCO A) Under Sarbanes Oxley, the new law does not | |   | Student Answer: | | require a national CPA license for all CPAs. |   | | | establish an oversight board, called the Public Company Accounting Oversight Board, for

Freeman10E Sm Ch01

2690 words - 11 pages CHAPTER 1 GOVERNMENTAL AND NONPROFIT ACCOUNTING: ENVIRONMENT AND CHARACTERISTICS ANSWERS TO QUESTIONS QUESTION 1-1 a. The similarities of accounting for profit-seeking and G&NP organizations include: 1. Double-entry system of accounts. 2. Most accounting mechanics, e.g., basic transaction documents, journals, ledgers, charts of accounts. 3. Where a G&NP organization has a business-type activity, e.g., a municipal

Non For Profit

2690 words - 11 pages CHAPTER 1 GOVERNMENTAL AND NONPROFIT ACCOUNTING: ENVIRONMENT AND CHARACTERISTICS ANSWERS TO QUESTIONS QUESTION 1-1 a. The similarities of accounting for profit-seeking and G&NP organizations include: 1. Double-entry system of accounts. 2. Most accounting mechanics, e.g., basic transaction documents, journals, ledgers, charts of accounts. 3. Where a G&NP organization has a business-type activity, e.g., a municipal

Related Papers

Chapter 2 Managerial Accounting Solutions Essay

1724 words - 7 pages Chapter 2 Solutions, A&B Exercise 2-1 (10 minutes) 1. The wages of employees who build the sailboats: direct labor cost. 2. The cost of advertising in the local newspapers: marketing and selling cost. 3. The cost of an aluminum mast installed in a sailboat: direct materials cost. 4. The wages of the assembly shop’s supervisor: manufacturing overhead cost. 5. Rent on the boathouse: a combination of manufacturing overhead

Accounting 101 Chapter 2 Homework Essay

1755 words - 8 pages  account balance.   c.  Use source documents to identify accounts affected by external transactions.   d.  Analyze the impact of the transaction on the accounting equation.   e.  Prepare a trial balance.   f.   Record transactions using debits and credits. Learning Objective: 02­01 Identify the basic steps in measuring external transactions.   5  3  1  2  6  4                    Worksheet     Below are the steps in the measurement

Acc 400 Week 2: E Text Individual Assignments

584 words - 3 pages Week 2: E-text Individual Assignments ACC/400 Week 2: E-text Individual Assignments Financial Accounting: Tools for Business Decision Making, 4th edition Chapter 8: Question 3 3. What are the essential features of the allowance method of accounting for bad debts? According to Kimmel, Weygandt, & Kieso (2007), the allowance method of accounting has three essential features: 1. Estimated uncollectible accounts receivable

Intermediate Financial Accounting Essay

5060 words - 21 pages CHAPTER 1 FINANCIAL ACCOUNTING AND ACCOUNTING STANDARDS IFRS questions are available at the end of this chapter. TRUE-FALSE—Conceptual Answer No. Description F 1. Definition of financial accounting. T 2. Purpose of financial statements. T 3. Definition of financial accounting. T 4. Capital allocation process. F 5. Objective of financial reporting. T 6. Decision-Usefulness approach. T 7. Users of financial statements