Accounting Intro-OX Flashcards
Accounting is
Accounting is the process of organizing, analyzing, and communicating financial information that is used for decision-making.
Explain the Importance of Accounting and Distinguish between Financial and Managerial Accounting
Financial accounting measures the financial performance of an organization using standard conventions to prepare and distribute financial reports, while managerial accounting uses both financial and non-financial information as a basis for making decisions within an organization.
Accounting information plays a vital role in personal and professional decisions, and a solid understanding of accounting can be useful in many professions.
Identify Users of Accounting Information and How They Apply Information
Accounting information is used by both internal and external users, with internal users being those within an organization who use financial information to make day-to-day decisions, while external users are those outside of the organization who use the financial information to make decisions or to evaluate an entity’s performance. Financial accounting is one of the broad categories in the study of accounting, and accountants generally use the same methodologies to prepare financial information. Financial information is mostly historical in nature, although companies and other entities also incorporate estimates into their accounting processes. The page also discusses the differences between financial and managerial accounting[1].
discusses the similarities and differences between for-profit, governmental, and not-for-profit organizations.
All of these organizations have inflows and outflows of cash and other resources that must be managed, and all have a need for accounting information. For-profit businesses seek to earn a profit by selling goods and services, while governmental entities provide services to the general public and are funded through taxes and fees.
Service businesses provide intangible benefits to customers, while not-for-profit organizations are formed for a specific purpose or mission and want to use available resources in an efficient manner[1].
1.4 Explain Why Accounting Is Important to Business Stakeholders
why accounting is important to business stakeholders. It defines stakeholders as people or groups who rely on financial information to make decisions, such as stockholders, creditors, governmental and regulatory agencies, customers, management and other employees, and various other parties and entities. The article discusses how stockholders use financial information to assess the financial performance of a business and make decisions such as whether or not to purchase additional stock, sell existing stock, or maintain the current level of stock ownership. It also explains how creditors and lenders use financial information to assess the likelihood that funds will be repaid, which helps them determine how much money to lend, how long to lend the money for, and how much interest to charge the borrower. Finally, the article notes that businesses generally have three ways to raise capital: profitable operations, selling ownership (stock), and borrowing from lenders[1].
Accounting is sometimes called the “language of _____.”
Wall Street
business
Main Street
financial statements
Financial accounting information ________.
should be incomplete in order to confuse competitors
should be prepared differently by each company
provides investors guarantees about the future
summarizes what has already occurred
External users of financial accounting information include all of the following except ________.
lenders such as bankers
governmental agencies such as the IRS
employees of a business
potential investors
Which of the following groups would have access to managerial accounting information?
bankers
investors
competitors of the business
managers
Financial accounting information ________.
should be incomplete in order to confuse competitors
should be prepared differently by each company
provides investors guarantees about the future
summarizes what has already occurred
All of the following are examples of managerial accounting activities except ________.
preparing external financial statements in compliance with GAAP
deciding whether or not to use automation
making equipment repair or replacement decisions
measuring costs of production for each product produced
External users of financial accounting information include all of the following except ________.
lenders such as bankers
governmental agencies such as the IRS
employees of a business
potential investors
Which of the following groups would have access to managerial accounting information?
bankers
investors
competitors of the business
managers
All of the following are examples of managerial accounting activities except ________.
preparing external financial statements in compliance with GAAP
deciding whether or not to use automation
making equipment repair or replacement decisions
measuring costs of production for each product produced
Which of the following is not true?
Organizations share a common purpose or mission.
Organizations have inflows and outflows of resources.
Organizations add value to society.
Organizations need accounting information.
The primary purpose of what type of business is to serve a particular need in the community?
for-profit
not-for-profit
manufacturing
retail
Which of the following is not an example of a retailer?
electronics store
grocery store
car dealership
computer manufacturer
jewelry store
A governmental agency can best be described by which of the following statements?
has a primary purpose of making a profit
has a primary purpose of using taxpayer funds to provide services
produces goods for sale to the public
has regular shareholder meetings
Which of the following is not true?
Organizations share a common purpose or mission.
Organizations have inflows and outflows of resources.
Organizations add value to society.
Organizations need accounting information.
Which of the following is likely not a type of not-for-profit entity?
public library
community foundation
university
local movie theater
Which of the following is not considered a stakeholder of an organization?
creditors
lenders
employees
community residents
a business in another industry
Stockholders can best be defined as which of the following?
investors who lend money to a business for a short period of time
investors who lend money to a business for a long period of time
investors who purchase an ownership in the business
analysts who rate the financial performance of the business
Which of the following sell stock on an organized stock exchange such as the New York Stock Exchange?
publicly traded companies
not-for-profit businesses
governmental agencies
privately held companies
government-sponsored entities
. LO 1.4All of the following are sustainable methods businesses can use to raise capital (funding) except for ________.
borrowing from lenders
selling ownership shares
profitable operations
tax refunds
LO 1.4The accounting information of a privately held company is generally available to all of the following except for ________.
governmental agencies
investors
creditors and lenders
competitors
The primary purpose of what type of business is to serve a particular need in the community?
for-profit
not-for-profit
manufacturing
retail
LO 1.5Which of the following skills/attributes is not a primary skill for accountants to possess?
written communication
verbal communication
ability to work independently
analytical thinking
extensive computer programing background
Which of the following is typically required for entry-level positions in the accounting profession?
bachelor’s degree
master’s degree
Certified Public Accountant (CPA)
Certified Management Accountant (CMA)
only a high school diploma
Typical accounting tasks include all of the following tasks except ________.
auditing
recording and tracking costs
tax compliance and planning
consulting
purchasing direct materials
What type of organization primarily offers tax compliance, auditing, and consulting services?
corporations
public accounting firms
governmental entities
universities
Most states require 150 semester hours of college credit for which professional certification?
Certified Management Accountant (CMA)
Certified Internal Auditor (CIA)
Certified Public Accountant (CPA)
Certified Financial Planner (CFP)
