Ch 3 Introduction to Financial Accounting

Question 1

Financial Accounting (FI)

Answer 1

• external
• legal reporting
• track financial impact
  defined by law and regulations

***REQUIRED PROCESS

Question 2

Management Accounting (CO)

Answer 2

• internal
• managing firms cost and revenue
  defined by management

***OPTIONAL PROCESS

Question 3

Key FI processes

Answer 3

• General Ledger Accounting (G/L) - data used to generate financial statements
• Accounts Receivable Accounting - fulfillment process after sale of a good
• Accounts Payable Accounting - procurement process after recording the money owed to vendor after receiving a good

Asset Accounting- data related to purchase, use and disposable of assets such as building, equipment, machinery

Bank Ledger Accounting- recording transactions and financial investments

Question 4

Financial Statements

Answer 4

Balance sheet- highlights assets, liabilities, equity
Income Statement (revenue - expense = income)
Cash Flow - flow of cash from operating, financing, and investing activities

Question 5

Organizational Data needed in Financial Accounting

Answer 5

Client

Company -

• *highest org level for Financial reporting
• *smallest entity that supports a full General ledger (G/L)

Business Area - creating financial statements across various company codes

Question 6

Charts of Accounts (COA)

Answer 6

list of all accounts in the company’s general ledger

Question 7

Types of COA

Answer 7

operative COA - day to day transactions (**REQUIRED)

country-specific COA: to meet country reporting requirements (**OPTIONAL)

group COA: to consolidate reporting at the enterprise level (**OPTIONAL)