Financial and Managerial Accounting Question and Answers 2024
What is the accounting equation? - Assets = Liability + Owners' Equity
Please explain
... [Show More] the 3 parts of the accounting equation - Assets = Cash, Accounts Receivable (AR), trademarks/patents, investments
Liabilities = claims by debtors, Accounts Payable (AP)
Equity = claims by the owner
Debit is always on the _________ and Credit is always on the _________. - Debit is on the LEFT and credit is on the RIGHT.
Who is the "father of accounting" and in what year did he publish his book? - Luca Pacioli
Summa de arithmetica - 1494
Why do we need accounting? - To discover financial inconsistencies, fraud
Analyze and predict budgets
Compare different companies' financial reporting and performance
Define "accounting" - A way of recording, analyzing and summarizing transactions of a business.
What is the "language" of accounting? - Double entry bookkeeping
What is the idea of double entry? - The idea is that each entry is written down twice - Debit and Credit
What are the three main steps of accounting? - 1. Recording the information
2. Ledgers
3. Financial statements
Cost and management accounting is concerned with providing management information concerning what? - 1. Planning
2. Control
3. Making decisions
What are some of the roles of Managerial Accounting? - Cost accounting
Budgeting
Making management decisions
Evaluating performance
Budgeting for capital costs and making decisions
Price formation
What are some of the roles of Managing Finance? - Planning and managing cash flows, including currency flows
Long-term financing decisions
Managing financial risks
Financing for investments
Managing working capital
What are some of aspects of preparing financial statements? - Financial reports
Tax reports and calculations
Providing other info. for external users
Who are the users of information of FA? - Shareholders, investors, banks, suppliers, credit institutions, tax collectors, company employees and other EXTERNAL users
Who are the user of information of MA? - Management of different levels WITHIN the company - president, shop foreman, etc.
What regulation(s) must be followed in FA? - Accounting is strictly regulated by external standard such as IFRS.
What regulation(s) must be followed in MA? - The managers themselves decide the accounting methods.
What degree of accuracy in required in FA? - The data must be fair and accurate.
What degree of accuracy in required in MA? - Approximate values are acceptable as long as they are sufficient for management decisions.
What is the scope of accounting in FA? - Activities of the ENTIRE organization
What is the scope of accounting in MA? - Whatever the manager decides - separate segments, areas of production, subdivisions, market areas
What are the measures of accounting information in FA? - Cost and monetary
What are the measures of accounting information in MA? - Cost, in kind, labor
What is the information base in FA? - Information about actual facts
What is the information base in MA? - Both factual, standard and plans, as well as forecasts
What is the frequency of information provided in FA? - Quarterly, annually
What is the frequency of information provided in MA? - Reports can be produced hourly, daily, weekly, as needed. [Show Less]