Ch1 - Language of Business Flashcards

1
Q

Two sub-classes of accounting

A
  1. Financial accounting

2. Managerial accounting

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2
Q

Two key missions of accounting

A
  1. Facilitate value creation by supporting decision-making.

2. Measure and report the amount of value created.

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3
Q

Definition of accounting

A

Accounting is an information system that measures (valuation), processes (records transactions), and communicates (reports) financial information about an enterprise.

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4
Q

List the financial statements

A

Balance sheet (also Statement of financial position)
Income statement (also Profit and loss account or P&L)
Statement of cash flows
Statement of changes in equity
Notes to financial statements

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5
Q

Who are internal users of financial statements?

A

Management

Employees

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6
Q

List some of the external users of financial statements

A

Investors (shareholders, potential investors, investment analysts)
Creditors (suppliers and lenders, including banks)
Government (tax authorities, regulatory agencies)
Customers
Competitors
General public

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