FAU ACER 1.1 – Flashcards
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Accounting is the...... and helps people....
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-Language of business - make decisions
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3 types of accounting
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-Tax -Managerial -Financial
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tax accounting
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- helps people determine how much is owed to the government for taxes
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Managerial accounting
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- help people INSIDE the business (internal users) make decisions - usually tailor accounting reports to meet the needs of a SPECIFIC decision maker -Not required to follow GAAP or tax regulations -Confidential
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Financial accounting
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- help people OUTSIDE (external users) of the business make decisions - Not confidential - must follow GAAP - used in a wide variety of business decisions
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Generally accepted accounting principles are the "ground rules" used in the preparation of:
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Financial Statements
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GAAP stands for:
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Generally Accepted Accounting Principles
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The tailoring of an accounting report to meet the needs of a specific decision maker is more characteristic of financial accounting reports than of management accounting reports (True or False)
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False
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The accounting standards and concepts used in the preparation of financial statements are called:
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Generally accepted accounting principles
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In the phrase "generally accepted accounting principles," the words generally accepted mean that the principles:
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Are understood and observed by all the participants in the financial reporting process.
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Management accountants primarily are concerned with developing information
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Suited to the needs of decision makers within the organization
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Management accounting refers to the preparation and use of accounting information designed to meet the needs of decision makers outside the business organization (True or False)
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False
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Investors are individuals and other enterprises that have provided equity to the reporting enterprise (True or False)
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True
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It is the function of management accounting to perform the following activities, except:
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Audited financial statements
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Financial statements are prepared primarily for the benefit of
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persons outside of the business organization.
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External users of accounting information have a financial interest in an entity but are not involved with the day-to-day operations of the enterprise (True of False)
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True
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Although accounting information is used by a wide variety of external parties, financial reporting is primarily directed toward the informational needs of
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Investors and creditors.
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Owners are not internal users of accounting data because
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owners = investors. Owners are not typically involved in day to day operations and do not make decisions like managers (internal users) do.
