Accounting for Decision Makers - C213

Accounting for Decision Makers - C213 Bookkeeping - Answer-is the preservation of a systematic, quantitative record of an activity Accounting - Answer-A system of providing "quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions." The key features of this definition are the following: Numbers: Accounting is quantitative. This is a strength because numbers can be easily tabulated and summarized. It is a weakness because some important business events, such as a toxic waste spill and the associated lawsuits and countersuits, cannot be easily described by one or two numbers. A financial dimension: The status and performance of a business is affected by and reflected in many dimensions—financial, personal relationships, community and environmental impact, and public image. Accounting focuses on just the financial dimension. Usefulness: The practice of accounting is supported by a long tradition of theory; U.S. accounting rules in fact have a theoretical conceptual framework, and some people actually make a living as accounting theorists. However, in spite of its theoretical beauty, accounting exists only because it is useful. Future decisions based on past information: Although accounting is the structured reporting of what has already occurred, this past information can only be useful if it impacts decisions about the future. financial accounting - Answer-which is the name given to accounting information provided for and used by external users. Managerial accounting - Answer-the name given to accounting systems designed for internal users financial statements - Answer-The three primary financial information documents: the balance sheet, income statement, and statement of cash flows. balance sheet - Answer-reports the resources of a company (the assets), the company's obligations (the liabilities), and the owners' equity, which represents how much money has been invested in the company by its owners. income statement - Answer-This document reports the amount of net income earned by a company during a period, with annual and quarterly income statements being the most common. statement of cash flows - Answer-This document reports the amount of cash collected and paid out by a company in the following three types of activities: operating, investing, and financing. The emphasis in financial accounting is on which of the following external user groups? - Answer-Investors and creditors