Accounting Basics Flashcards
List the four concepts of differences between financial accounting and management accounting
Regulations, timeliness, level of detail, main users.
What is the definition of accounting ?
Accounting is the process of IDENTIFYING, MEASURING and COMMUNICATING economic information about an entity to a variety of users for decision making purposes.
How can we use accounting information
Internal users - use for decision making and can evaluate issues within the entity such as seeing if resources are being maximised and can look at profit/ loss and what needs to be fixed.
External users - customers can use information to form opinions about entity
Name three internal users
CEO, CFO, COO
Name three external users (stakeholders)
Customers, government authorities, suppliers/ banks
What are the four steps of accounting as an information system?
Identify information > record information > analyse information > report information
Finish the sentence - ‘accounting is the …’
Language of business
List the five main limitations of financial reports
Time lag, outdated information, subjectivity of information, costs, release of competitive information
Briefly summarise the conceptual framework of accounting
General purpose is to give financial information about an entity that is useful for internal and external users in making decisions about the entity
Name the FOUR qualitative characteristics of accounting
Comparability - can compare aspects of the entity from any time period
Verifiability - assurance that information is valid and correct
Timeliness - information is available to all stakeholders in time of decision making
Understandability - information is presented in the most understandable manner
Name THREE different roles an accountant can do
Cost accounting
Tax accounting
Internal and external auditing
Not for profit organisations
Consulting/ business consulting
What are the big FOUR accounting firms
KPMG
Deloittes
PriceWaterhouseCoopers (PWC)
Ernst and Young
