1. Introduction & Financial statements

Question 1

what types of accounting exists?

Answer 1

financial accounting, management accounting and tax accounting

Question 1

what type o financail exists for the company? explain

Answer 1

external→ like a loan (lend money)
internal→ has its own souce (owners)

Question 2

what are assets?

Answer 2

resouces that the company has

Question 3

what are shareholders?

Answer 3

they are the owners of the company

Question 4

what are stakeholders?

Answer 4

peolpe that have interest in the company

Question 5

what is financial accounting?

Answer 5

describes the financial resouces, obligations and activities of an economic entity (either an organization or an individual)

Question 6

what is the financial accounting used by?

Answer 6

– external decision makers, such as stockholders, suppliers, banks and
government agencies
– internal decision makers, such as top managers and department heads

Question 7

what is management accounting?

Answer 7

• Develops and interprets accounting information intended
  specifically to aid management running the business
• its only available to internal decision makers

Question 8

what is tax accounting?

Answer 8

• Prepares income tax returns
• Based on financial accounting information
• Follows income tax reporting requirements and regulations

Question 9

what is the goal of financial accounting?

Answer 9

to report information that discloses an organization’s financial status to its stakeholders

Question 10

what types of financial statements exists?

Answer 10

– Statement of financial position (Balance sheet)
– Income statement (P&L)
– Statement of cash flows
– Statement of changes in owners’ equity
– Notes to the financial statements

Question 11

what is the accounting system?

Answer 11

• it is used to perform financial reporting
• gives assurance on the reliability of financial reports
• avoids erros, waste and fraud

Question 12

what is the accounting standards?

Answer 12

rules that every company has to follow
- To ensure the quality and integrity of financial reporting
accounting is regulated
- Financial statements are prepared in conformity with
accounting standard

Question 13

what is an audit of a company?

Answer 13

an investigation of a company’s financial statements, desgined to evaluate their fairness (reliability and completeness)

Question 14

what audtis of companies’ financial statements allow the users of accounting information to do?

Answer 14

• allow the users of accounting information to have some assurance of its reliability

Question 15

what are auditors?

Answer 15

• experts in financial reporting which are independent of the audited firm

Question 16

what are the qualitites of financial statements information?

Answer 16

• relevance → information makes a difference in a business decision (linked with materiality)
• faithful representation→ information accurately depicts what really happened
• understandability → presented in a clear and concise fashion
• comparability and consistency → companies use the same accounting principles and methods from year to year
• verifiability → independent measures, using the same methods, obtain similar results
• timeliness → must be available before it loses its capacity to influence decision