Chapter 1: Introduction To Accounting And Finance Flashcards
The difference between Accounting and Finance
Accounting - The collection, interpretation, analysis, and presentation of financial information to enhance decision making in a business
Finance - The raising and investing of capital in a business
Define the two main strands of accounting
Managerial Accounting - Specific, unregulated accounting information for enhancing management decision making within a specific business.
Financial Accounting - General regulatory financial information, generally bi-annually or yearly, which seeks to meet the needs of many user
What are the three main forms of a business
Sole proprietary
Partnership
Limited Company
Who are the main users of accounting information?
Customers, competitors, employees, government, communities, investment analysts, suppliers, lenders, managers, owners
What are the characteristics of Management Accounting?
Specific High detail Unregulated Potentially frequent Reports as required Future oriented as well as historical Can contain financial and non financial information
What are the characteristics of Financial Accounting?
General purpose Broad overview Subject to regulations Annual or bi-annually Historical or past tense Focus on financial metrics
Define the typical departmental set up of a limited company?
Shareholders appoint a board of directors which overseas the management of the company.
The business segregates into specific departments such as finance, human resources, marketing and operations.
Board of directors comprises of CEO and chairman of the board.
What is the difference between current and non current in accounting
The current or non current nature of an asset or liability refers to its liquidity.
Current assests and liability, being able to liquidity within a year, whereas, non current assets and liabilities are long-term over a year to access.
