Test Prep for Financial and Managerial
Accounting: Real Questions, Real Answers
What is one of the primary purposes of accounting? - CORRECT ANSWER
✅✅✅to accumulate, measure, and communicate financial information
about businesses and other organizations
bookkeeping - CORRECT ANSWER ✅✅✅the preservation of a systematic,
quantitative record of an activity
3 basic functions of accounting - CORRECT ANSWER ✅✅✅1) Analysis
- looking at business events to determine if information should be captured by
the accounting system
2) Bookkeeping
- the day-to-day keeping track of transactions
3) Evaluation
- obtaining and using financial information to determine the health and
performance of a business
accounting system - CORRECT ANSWER ✅✅✅the procedures and
processes used by a business to analyze transactions, handle routine
bookkeeping tasks, and structure information so it can be used to evaluate the
performance and health of the business
,accounting - CORRECT ANSWER ✅✅✅a system for providing quantitative
financial information about economic entities that is useful for making sound
economic decisions; provides the means of recording and communicating
business activities and the results of those activities
4 key components of the accounting definition - CORRECT ANSWER
✅✅✅1) Quantitative
+: numbers can be easily tabulated and summarized
-: some important business events, such as toxic waste spills and the
associated lawsuits and countersuits, cannot be easily described by one or two
numbers
2) Financial
- accounting focuses on the financial dimension of a business's health and
performance
3) Useful
- accounting exists because it is useful
4) Decisions
- past information impacts future decisions
4 steps of the decision-making process - CORRECT ANSWER ✅✅✅1) ID the
issue
2) Gather info
3) ID alternatives
4) Select the best option
,The decision-making process does not guarantee a good ______; it only
ensures that a good decision is made - CORRECT ANSWER ✅✅✅outcome
business - CORRECT ANSWER ✅✅✅an organization operated with the
objective of making a profit from the sale of goods and/or services
nonprofit organization - CORRECT ANSWER ✅✅✅an entity without a profit
objective, oriented toward providing services efficiently and effectively
capital/financing - CORRECT ANSWER ✅✅✅the money used by the
business to get the resources it needs
Capital comes from 3 sources: - CORRECT ANSWER ✅✅✅1) investors
(owners)
2) creditors (lenders)
3) the business itself in the form of earnings that have been retained
revenues - CORRECT ANSWER ✅✅✅the amount of assets created through
the sale of goods and services
Accountants play these 2 major roles - CORRECT ANSWER ✅✅✅1)
Measuring and reporting
2) Advising
- advising managers on how to structure business activities so as to achieve
goals (i.e. generating a profit, minimizing costs, providing efficient services,
etc.)
, accounting cycle - CORRECT ANSWER ✅✅✅The procedure for analyzing,
recording, classifying, summarizing, and reporting the transactions of a
business
managerial accounting - CORRECT ANSWER ✅✅✅the gathering and
analysis of information for the purpose of internal decision making
financial accounting - CORRECT ANSWER ✅✅✅the gathering, reporting,
and analysis of information primarily for the benefit of external users such as
investors and creditors
What are some of the areas that are looked at in managerial accounting? -
CORRECT ANSWER ✅✅✅- product costs
- breakeven analysis
- budgeting
- performance evaluation
- outsource production?
What are some of the areas that are looked at in financial accounting? -
CORRECT ANSWER ✅✅✅- credit analysis
- regulatory uses
- estimate the value of a company
annual report - CORRECT ANSWER ✅✅✅A document that summarizes the
results of operations and financial status of a company for the past year and
outlines future plans
Accounting: Real Questions, Real Answers
What is one of the primary purposes of accounting? - CORRECT ANSWER
✅✅✅to accumulate, measure, and communicate financial information
about businesses and other organizations
bookkeeping - CORRECT ANSWER ✅✅✅the preservation of a systematic,
quantitative record of an activity
3 basic functions of accounting - CORRECT ANSWER ✅✅✅1) Analysis
- looking at business events to determine if information should be captured by
the accounting system
2) Bookkeeping
- the day-to-day keeping track of transactions
3) Evaluation
- obtaining and using financial information to determine the health and
performance of a business
accounting system - CORRECT ANSWER ✅✅✅the procedures and
processes used by a business to analyze transactions, handle routine
bookkeeping tasks, and structure information so it can be used to evaluate the
performance and health of the business
,accounting - CORRECT ANSWER ✅✅✅a system for providing quantitative
financial information about economic entities that is useful for making sound
economic decisions; provides the means of recording and communicating
business activities and the results of those activities
4 key components of the accounting definition - CORRECT ANSWER
✅✅✅1) Quantitative
+: numbers can be easily tabulated and summarized
-: some important business events, such as toxic waste spills and the
associated lawsuits and countersuits, cannot be easily described by one or two
numbers
2) Financial
- accounting focuses on the financial dimension of a business's health and
performance
3) Useful
- accounting exists because it is useful
4) Decisions
- past information impacts future decisions
4 steps of the decision-making process - CORRECT ANSWER ✅✅✅1) ID the
issue
2) Gather info
3) ID alternatives
4) Select the best option
,The decision-making process does not guarantee a good ______; it only
ensures that a good decision is made - CORRECT ANSWER ✅✅✅outcome
business - CORRECT ANSWER ✅✅✅an organization operated with the
objective of making a profit from the sale of goods and/or services
nonprofit organization - CORRECT ANSWER ✅✅✅an entity without a profit
objective, oriented toward providing services efficiently and effectively
capital/financing - CORRECT ANSWER ✅✅✅the money used by the
business to get the resources it needs
Capital comes from 3 sources: - CORRECT ANSWER ✅✅✅1) investors
(owners)
2) creditors (lenders)
3) the business itself in the form of earnings that have been retained
revenues - CORRECT ANSWER ✅✅✅the amount of assets created through
the sale of goods and services
Accountants play these 2 major roles - CORRECT ANSWER ✅✅✅1)
Measuring and reporting
2) Advising
- advising managers on how to structure business activities so as to achieve
goals (i.e. generating a profit, minimizing costs, providing efficient services,
etc.)
, accounting cycle - CORRECT ANSWER ✅✅✅The procedure for analyzing,
recording, classifying, summarizing, and reporting the transactions of a
business
managerial accounting - CORRECT ANSWER ✅✅✅the gathering and
analysis of information for the purpose of internal decision making
financial accounting - CORRECT ANSWER ✅✅✅the gathering, reporting,
and analysis of information primarily for the benefit of external users such as
investors and creditors
What are some of the areas that are looked at in managerial accounting? -
CORRECT ANSWER ✅✅✅- product costs
- breakeven analysis
- budgeting
- performance evaluation
- outsource production?
What are some of the areas that are looked at in financial accounting? -
CORRECT ANSWER ✅✅✅- credit analysis
- regulatory uses
- estimate the value of a company
annual report - CORRECT ANSWER ✅✅✅A document that summarizes the
results of operations and financial status of a company for the past year and
outlines future plans
