General Questions

Question 1

What are goods?

Answer 1

Goods are physical items that can be touched and felt. Goods are tangible.

Question 2

What are cash flows?

Answer 2

Cash flows are cash receipts and cash payments of a business.

Question 3

What is value?

Answer 3

Value is the price someone is willing to pay for an item or a service.

Question 4

What is a balance sheet?

Answer 4

A balance sheet is a financial statement that reports the assets, liabilities and the owner´s equity of a business at a specific point in time.

Question 5

What is the focus of Financial Accounting?

Answer 5

The main focus of financial accounting is to provide information for external decision makers

Question 6

Uses for Financial Accounting:

Answer 6

• Prepare Financial Statements

- Report monetary transactions

Question 7

Examples from financial accounting:

Answer 7

• Income statement
• Balance sheet
• Statement of stakeholder’s equity
• Statement of cash flows

Question 8

What is the focus of managerial accounting?

Answer 8

The focus of managerial accounting is to provide information for internal decision makers

Question 9

What is the main use from managerial accounting?

Answer 9

It helps managers to make better decisions for success

Question 10

Examples from managerial accounting:

Answer 10

• Sales budget FY 2018
• Production budget FY 2018
• Profit Center Results 2018
• Costs for pricing a computer/ car

Question 10

Examples from managerial accounting:

Answer 10

• Sales budget FY 2018
• Production budget FY 2018
• Profit Center Results 2018
• Costs for pricing a computer/ car

Question 11

What are the 3 types of companies in managerial accounting?

Answer 11

• Service company
• Merchandise company
• Manufacturing company

Question 12

What are service companies?

Answer 12

Service companies are those that do not sell a physical product but instead provide services to their customers.
Examples: Banks, accounting firms and educational firms.

Question 13

What are merchandising firms?

Answer 13

Merchandising companies are those which sell products but do not make products. Merchandising companies are broken up into two different types: retailers and wholesalers

Question 14

What´s the main characteristic of the wholesalers?

Answer 14

Wholesalers buy bulk goods from manufacturers or distributors and store them. Then they sell them to retailers in smaller quantities.

Question 15

What´s the main characteristic of the retailers?

Answer 15

Retailers buy smaller amounts of bulk goods from wholesalers or distributors and resell them to the end consumers.

Question 16

What are manufacturing companies?

Answer 16

Manufacturing companies are companies that make a product.

Examples: Siemens, Volkswagen, Monster Beverages

Question 17

What are raw materials?

Answer 17

Raw materials are the components that companies use to produce their products. Raw materials are any materials that have not yet been used in the production process. They could even be already manufactured materials from another company such as processors from Intel being built in a computer company such as Dell.

Question 18

What does work-in-progress mean?

Answer 18

Work-in-progress is inventory that has gone into the production process but has not yet been finished.
Example: A plane from Boeing being built: Its is not a bunch of raw materials nor a finished product, but a work-in-progress.

Question 19

What is the finished goods inventory?

Answer 19

When a product is finished it is transferred to finished goods inventory.

Question 20

What are hybrid companies?

Answer 20

They are companies that don´t fit in one of the 3 main categories of companies. One good example would be a restaurant: It makes products (meals), sell products it does not make (beverages) and provides a service (serving a meal).

Question 21

GAAP:

Answer 21

Generally Accepted Accounting Principles

Question 22

IFRS:

Answer 22

International Financial Reporting Standards