Financial & Managerial Accounting-Chapter 1 Test 2024

Financial & Managerial Accounting-Chapter 1 Test 2024 Financial Accounting Information - Information that's provided to external parties who have an interest in a company is sometimes referred to as what? (4) (L01-1) Managerial Accounting Information - Information used internally by management and others is commonly referred to as what? (4) (L01-1) Judgment/Internal control - Both financial and managerial accounting require the use of ______________, and information prepared for either purpose should be subject to the company's system of _____________. (4) (L01-1) judgment - financial accounting concepts are critical in order to understand the financial condition of a business enterprise. Determining the company's net income by subtracting its expenses from its revenue is a particularly important part of financial reporting today. This may appear to be a simple process of keeping accounting records and preparing reports from those records, but a great deal of ________________ is required. For example, when should the cost of acquiring a resource that is used for several years be recognized as an expense in the company's financial statements? What information is particularly useful for management, but not appropriate for public distribution because of the potential competitive disadvantage that might result? (4) (L01-1) good decisions - the primary objective of accounting is to provide information that is useful in making ______________. and as a result of good decisions societal prosperity and welfare is maximized. (4) (L01-1) language of business - because accounting is widely used to describe all types of business activity, it is sometimes referred to as the ______________. (5) (L01-1) costs, prices, sales volume, profits, and return on investment - _____________ are all accounting measurements. (5) (L01-1) accounting information - _____________________ is the means by which we measure and communicate economic events. (5) (L01-1) Financial Accounting - __________________ refers to information describing the financial resources, obligations, and activities of an economic entity (either in organization or an individual). (6) (L01-1) financial position - Accountants use the term _______________ to describe an entity's financial resources and obligations at a point in time. (6) (L01-1) results of operations - Accountants use the term ____________ to describe an entity's financial activities during the year. (6) (L01-1) financial accounting information - ________________ is designed primarily to assist investors and creditors in deciding where to place their scarce investment resources. Such decisions are important to society, because they determine which companies and industries will receive the financial resources necessary for growth. (6)(L01-1) capital - When ________________, which is a scarce resource, is allocated wisely, the overall prosperity of society is maximized. (6)(L01-1) general-purpose - financial accounting information is also used by managers and income tax returns. In fact, financial accounting information is used for so many different purposes that it is often called _______________ accounting information. (6)(L01-1) management/managerial accounting - ________________ or _______________ involves the development and interpretation of accounting information intended specifically to assist management in operating the business. Management use this information in setting the company's overall goals, evaluating the performance of departments and individuals, deciding whether to introduce a new line of products, and making virtually all types of managerial decisions. (6) (L01-1) daily business operations - a company's managers and employees constantly need information to run and control _______________. they need to know the amount of money in the company's bank accounts; the types, quantities, and dollar amounts of merchandise in the company's warehouse; and the amounts owed to specific creditors. (6) (L01-1) accounting system - An ___________________ consists of the personal, procedures, technology, and records used by an organization to develop accounting information and to communicate this information to decision-makers. (7) (L01-2) accounting systems - In small businesses __________________ may consist of little more than a cash register, a checkbook, and an annual trip to an income tax preparer. (7) (L01-2) accounting systems - In large businesses, ___________________ include computers, highly trained personnel, and accounting reports that affect the daily operations of every department. (7) (L01-2)