1|Page
Principles of Financial and
Managerial Accounting Answers
And Questions
What are the three functions of Accounting Systems - CORRECT
ANSWER>>Analysis of events, routing book keeping, and structuring data for
evaluation
Why do you structure the information in accounting systems - CORRECT
ANSWER>>used to evaluate the performance and health of a business
What does it mean to analyze a business - CORRECT ANSWER>>determine
if the information should be captured by accounting systems
What is Bookkeepings? - CORRECT ANSWER>>Day-to-Day keeping track
of things
What is the decision making process? - CORRECT ANSWER>>1. Identify
the issue
2. gather information
3. identify alternatives
4. select the option that will most likely result in desired objective
What is a business? - CORRECT ANSWER>>an organization operated to
make a profit from the sale of goods and services.
What is a non profit organization? - CORRECT ANSWER>>an entity without
a profit objective, oriented toward providing services efficiently and effectively
What are the resources businesses need to pursue an objective? -
CORRECT ANSWER>>buildings, machines, cash, trained workforce
What is the money called to buy resources businesses need? - CORRECT
ANSWER>>capital or financing
Where does capital come from? - CORRECT ANSWER>>investors
creditors(lenders)
business itself (from earnings retained)
,2|Page
What is revenues? - CORRECT ANSWER>>the amount of assets created
through the sale of goods and services
What are the two primary areas of accounting? - CORRECT
ANSWER>>managerial and financial
What is managerial accounting? - CORRECT ANSWER>>gathering and
analysis of information for the purpose of internal decision making.
What is financial accounting? - CORRECT ANSWER>>the gathering and
reporting, and analysis of information primarily for the benefit of external
users such as investors and creditors
What are the tasks of a managerial accountant? - CORRECT
ANSWER>>Product Cost
breakeven analysis
budgeting
performance evaluation
outsource production
What are the tasks of financial accountant? - CORRECT ANSWER>>credit
analysis
regulatory users
estimate value of a company
External Financial Reports - CORRECT ANSWER>>include the firms' annual
report, which is used by individuals and organizations that have an economic
interest in the business but are not part of the management
what is the annual report? - CORRECT ANSWER>>documents that
summarize the results of operations and financial status of a company for the
past year and outlines future plans.
What are financial statments? - CORRECT ANSWER>>reports such as a
balance sheet, income statement, statement of cash flows; which summarize
the financial status and results of operations of a business entity.
What are the three primary financial statements? - CORRECT
ANSWER>>balance sheet
income statement
statement of cash flows
,3|Page
What is a balance sheet? - CORRECT ANSWER>>list as a point in time
Resources (assets)
Obligations (liabilities)
What are income sheets? - CORRECT ANSWER>>period of time (ex. year)
How much profit was made
What are statements of cash flows? - CORRECT ANSWER>>period of time
(ex. year)
Where did our cash come from? Where did it go?
Key external Users? - CORRECT ANSWER>>Lenders and Investors
What do lenders require as protection against title defects? - CORRECT
ANSWER>>current income
existing obligations
existing assets
What do investors look for? - CORRECT ANSWER>>is the business
profitable?
what is the potential for the future?
What is the securities and exchange commission (SEC)? - CORRECT
ANSWER>>Monitors the financial accounting disclosures of companies. Both
U.S and Foreign whose stocks trade on the U.S stock exchanges
What is the Internal Revenue Service (IRS)? - CORRECT
ANSWER>>Collects taxes and audits tax filings for mistakes or fraud.
which primary area of accounting generates reports for internal users? -
CORRECT ANSWER>>management accounting
which group uses financial information to evaluate whether a company will be
able to repay a loan? - CORRECT ANSWER>>lenders
which of the primary financial statements reports the resources, obligations,
and owner's equity of a company? - CORRECT ANSWER>>Balance Sheet
Within what kind of environment does accounting operate? - CORRECT
ANSWER>>organizations, ethics, and technology
, 4|Page
Who makes up the Financial Accounting Standards Board (FASB)? -
CORRECT ANSWER>>A group of people with a variety of business-related
backgrounds
What is the Financial Accounting Standards Board (FASB) Responsible for? -
CORRECT ANSWER>>studying accounting issues and establishing
accounting standards to govern financial reporting in the U.S
Is FASB government or private? - CORRECT ANSWER>>Private body- no
legal authority
who supports FASB? - CORRECT ANSWER>>fees received by companies
that are audited by public accounting firms
What is the Governmental Accounting Standards Board (GASB)? -
CORRECT ANSWER>>sets the accounting and financial reporting standards
for state and local governments.
What is GAAP? - CORRECT ANSWER>>Generally accepted accounting
principles
What authority does the SEC have? - CORRECT ANSWER>>regulate
financial markets and accounting
what does SEC stand for? - CORRECT ANSWER>>Securities and Exchange
Commission
what does AICPA stand for? - CORRECT ANSWER>>American Institute of
Certified Public Accountants
What does IRS stand for? - CORRECT ANSWER>>International Revenue
Service
What authority does the IRS have? - CORRECT ANSWER>>U.S
government agency that collects and regulates income statements
What does IASB stand for? - CORRECT ANSWER>>International
Accounting Standards Board
What is an audit? - CORRECT ANSWER>>ensuring a companies financial
statements are reliable
Principles of Financial and
Managerial Accounting Answers
And Questions
What are the three functions of Accounting Systems - CORRECT
ANSWER>>Analysis of events, routing book keeping, and structuring data for
evaluation
Why do you structure the information in accounting systems - CORRECT
ANSWER>>used to evaluate the performance and health of a business
What does it mean to analyze a business - CORRECT ANSWER>>determine
if the information should be captured by accounting systems
What is Bookkeepings? - CORRECT ANSWER>>Day-to-Day keeping track
of things
What is the decision making process? - CORRECT ANSWER>>1. Identify
the issue
2. gather information
3. identify alternatives
4. select the option that will most likely result in desired objective
What is a business? - CORRECT ANSWER>>an organization operated to
make a profit from the sale of goods and services.
What is a non profit organization? - CORRECT ANSWER>>an entity without
a profit objective, oriented toward providing services efficiently and effectively
What are the resources businesses need to pursue an objective? -
CORRECT ANSWER>>buildings, machines, cash, trained workforce
What is the money called to buy resources businesses need? - CORRECT
ANSWER>>capital or financing
Where does capital come from? - CORRECT ANSWER>>investors
creditors(lenders)
business itself (from earnings retained)
,2|Page
What is revenues? - CORRECT ANSWER>>the amount of assets created
through the sale of goods and services
What are the two primary areas of accounting? - CORRECT
ANSWER>>managerial and financial
What is managerial accounting? - CORRECT ANSWER>>gathering and
analysis of information for the purpose of internal decision making.
What is financial accounting? - CORRECT ANSWER>>the gathering and
reporting, and analysis of information primarily for the benefit of external
users such as investors and creditors
What are the tasks of a managerial accountant? - CORRECT
ANSWER>>Product Cost
breakeven analysis
budgeting
performance evaluation
outsource production
What are the tasks of financial accountant? - CORRECT ANSWER>>credit
analysis
regulatory users
estimate value of a company
External Financial Reports - CORRECT ANSWER>>include the firms' annual
report, which is used by individuals and organizations that have an economic
interest in the business but are not part of the management
what is the annual report? - CORRECT ANSWER>>documents that
summarize the results of operations and financial status of a company for the
past year and outlines future plans.
What are financial statments? - CORRECT ANSWER>>reports such as a
balance sheet, income statement, statement of cash flows; which summarize
the financial status and results of operations of a business entity.
What are the three primary financial statements? - CORRECT
ANSWER>>balance sheet
income statement
statement of cash flows
,3|Page
What is a balance sheet? - CORRECT ANSWER>>list as a point in time
Resources (assets)
Obligations (liabilities)
What are income sheets? - CORRECT ANSWER>>period of time (ex. year)
How much profit was made
What are statements of cash flows? - CORRECT ANSWER>>period of time
(ex. year)
Where did our cash come from? Where did it go?
Key external Users? - CORRECT ANSWER>>Lenders and Investors
What do lenders require as protection against title defects? - CORRECT
ANSWER>>current income
existing obligations
existing assets
What do investors look for? - CORRECT ANSWER>>is the business
profitable?
what is the potential for the future?
What is the securities and exchange commission (SEC)? - CORRECT
ANSWER>>Monitors the financial accounting disclosures of companies. Both
U.S and Foreign whose stocks trade on the U.S stock exchanges
What is the Internal Revenue Service (IRS)? - CORRECT
ANSWER>>Collects taxes and audits tax filings for mistakes or fraud.
which primary area of accounting generates reports for internal users? -
CORRECT ANSWER>>management accounting
which group uses financial information to evaluate whether a company will be
able to repay a loan? - CORRECT ANSWER>>lenders
which of the primary financial statements reports the resources, obligations,
and owner's equity of a company? - CORRECT ANSWER>>Balance Sheet
Within what kind of environment does accounting operate? - CORRECT
ANSWER>>organizations, ethics, and technology
, 4|Page
Who makes up the Financial Accounting Standards Board (FASB)? -
CORRECT ANSWER>>A group of people with a variety of business-related
backgrounds
What is the Financial Accounting Standards Board (FASB) Responsible for? -
CORRECT ANSWER>>studying accounting issues and establishing
accounting standards to govern financial reporting in the U.S
Is FASB government or private? - CORRECT ANSWER>>Private body- no
legal authority
who supports FASB? - CORRECT ANSWER>>fees received by companies
that are audited by public accounting firms
What is the Governmental Accounting Standards Board (GASB)? -
CORRECT ANSWER>>sets the accounting and financial reporting standards
for state and local governments.
What is GAAP? - CORRECT ANSWER>>Generally accepted accounting
principles
What authority does the SEC have? - CORRECT ANSWER>>regulate
financial markets and accounting
what does SEC stand for? - CORRECT ANSWER>>Securities and Exchange
Commission
what does AICPA stand for? - CORRECT ANSWER>>American Institute of
Certified Public Accountants
What does IRS stand for? - CORRECT ANSWER>>International Revenue
Service
What authority does the IRS have? - CORRECT ANSWER>>U.S
government agency that collects and regulates income statements
What does IASB stand for? - CORRECT ANSWER>>International
Accounting Standards Board
What is an audit? - CORRECT ANSWER>>ensuring a companies financial
statements are reliable
