Accounting Chapter
Module 1 2026 | Study
Guide, Practice Questions,
Answers, Rationales &
Exam Review | Complete
Ethics Study Guide
Updated 2026 Questions and Answers
100% Verified Exam Prep and Comprehensive
Rationales
Included
, Define Accounting The system of maintaining records of a company's operations and communicating
that information to decision makers. AKA the "language of business".
What are the two types of accounting? 1. Financial Accounting
2. Managerial Accounting
Financial Accounting the branch of accounting that prepares financial statements for external
users (investors, creditors, suppliers, government, etc.)
Managerial Accounting the branch of accounting that provides reports and analysis to internal
users (managers, executives, department heads, etc).
Investors Investors provide a company with resources in exchange for ownership and the
right to a share of the company's profits.
Creditors Persons or institutions (such as banks) who lend money to businesses with the
expectation of getting paid back in full, plus interest.
What are the three primary business activities? Financing, investing, and operating.
Financing Transactions made with creditors and investors.
Investing Transactions involving the purchase and sale of resources that will benefit the
company for more than 1 year.
Operating Transactions that relate to the primary operations of the company (i.e., running the
business to make a profit).
What is the accounting equation? Assets = Liabilities + Stockholders' Equity
Assets The total resources owned by a company.
Module 1 2026 | Study
Guide, Practice Questions,
Answers, Rationales &
Exam Review | Complete
Ethics Study Guide
Updated 2026 Questions and Answers
100% Verified Exam Prep and Comprehensive
Rationales
Included
, Define Accounting The system of maintaining records of a company's operations and communicating
that information to decision makers. AKA the "language of business".
What are the two types of accounting? 1. Financial Accounting
2. Managerial Accounting
Financial Accounting the branch of accounting that prepares financial statements for external
users (investors, creditors, suppliers, government, etc.)
Managerial Accounting the branch of accounting that provides reports and analysis to internal
users (managers, executives, department heads, etc).
Investors Investors provide a company with resources in exchange for ownership and the
right to a share of the company's profits.
Creditors Persons or institutions (such as banks) who lend money to businesses with the
expectation of getting paid back in full, plus interest.
What are the three primary business activities? Financing, investing, and operating.
Financing Transactions made with creditors and investors.
Investing Transactions involving the purchase and sale of resources that will benefit the
company for more than 1 year.
Operating Transactions that relate to the primary operations of the company (i.e., running the
business to make a profit).
What is the accounting equation? Assets = Liabilities + Stockholders' Equity
Assets The total resources owned by a company.
