WGU D196 PRINCIPLES OF FINANCIAL AND
MANAGERIAL ACCOUNTING | 2026 UNIT 2 ROLE
PURPOSE AND FUNCTIONS CORRECT QUESTIONS
AND VERIFIED ANSWERS ~WESTERN GOVERNORS
UNIVERSITY.
D196 PRINCIPLES OF FINANCIAL AND MANAGERIAL
ACCOUNTING
UNIT 2: THE ROLE AND PURPOSE OF ACCOUNTING
- 3 basic functions of an Accounting system
o Analysis of events
o Routine bookkeeping
o Structuring data for evaluation
- Define the word “Accounting”
o Quantitative (numbers)
o Financial (money)
o Useful (beautiful theory but focus on practical usefulness)
o Decisions (past information points to the future)
- The Decision-Making Process
o Step 1: identify the issue
o Step 2: gather information (accounting)
o Step 3: identify alternatives
o Step 4: select best option
- What do accountants do in a business?
o Measure and report- results of business activities
o Advise- because of their detailed understanding of a company’s
activities, accountants are well positioned to advise on company
actions
- Accounting is designed to accumulate, measure, and communicate
financial information about businesses and other organizations
- Accounting provides information for making informed decisions about
how to best use available resources
- Accounting is often called the “language of business”
- Who uses accounting information?
o Managerial Accounting- the gathering and analysis of
information for the purpose of internal decision making
o Financial Accounting- gathering, reporting, and analysis of
information primarily for the benefit of external users such as
, investors and creditors
- Managerial Accounting (INTERNAL)
o Product costs
o Breakeven analysis
o Budgeting
, o Performance evaluation
o Outsource production
- Financial Accounting (EXTERNAL)
o Credit analysis
o Regulatory uses (such as financial health of bank and insurance
companies)
o Estimate the value of the company
- Financial Statements
o Balance Sheet
▪ List as of a point in time
▪ Resources (assets)
▪ Obligations (liabilities)
o Income Statement
▪ For a period of time (such as a year)
▪ How much profit did we make?
o Statement of Cash Flows
▪ For a period of time (such as a year)
▪ Where did our cash come from?
▪ Where did our cash go?
- Key External Users
o Lenders
▪ Will the loan be repaid?
▪ Current income?
▪ Existing obligations
▪ Existing assests
o Investors
▪ Is the business profitable now?
▪ What is the potential for the future?
- Who uses account information?
o Management of the company
▪ planning, daily monitoring, evaluation
▪ uses both managerial and financial accounting
- Accounting related organizations
o FASB (Financial Accounting Standards Board)
▪ Private group (NOT a government agency)
▪ People experienced in business and accounting
▪ PUBLIC PROCESS
▪ No legal authority
MANAGERIAL ACCOUNTING | 2026 UNIT 2 ROLE
PURPOSE AND FUNCTIONS CORRECT QUESTIONS
AND VERIFIED ANSWERS ~WESTERN GOVERNORS
UNIVERSITY.
D196 PRINCIPLES OF FINANCIAL AND MANAGERIAL
ACCOUNTING
UNIT 2: THE ROLE AND PURPOSE OF ACCOUNTING
- 3 basic functions of an Accounting system
o Analysis of events
o Routine bookkeeping
o Structuring data for evaluation
- Define the word “Accounting”
o Quantitative (numbers)
o Financial (money)
o Useful (beautiful theory but focus on practical usefulness)
o Decisions (past information points to the future)
- The Decision-Making Process
o Step 1: identify the issue
o Step 2: gather information (accounting)
o Step 3: identify alternatives
o Step 4: select best option
- What do accountants do in a business?
o Measure and report- results of business activities
o Advise- because of their detailed understanding of a company’s
activities, accountants are well positioned to advise on company
actions
- Accounting is designed to accumulate, measure, and communicate
financial information about businesses and other organizations
- Accounting provides information for making informed decisions about
how to best use available resources
- Accounting is often called the “language of business”
- Who uses accounting information?
o Managerial Accounting- the gathering and analysis of
information for the purpose of internal decision making
o Financial Accounting- gathering, reporting, and analysis of
information primarily for the benefit of external users such as
, investors and creditors
- Managerial Accounting (INTERNAL)
o Product costs
o Breakeven analysis
o Budgeting
, o Performance evaluation
o Outsource production
- Financial Accounting (EXTERNAL)
o Credit analysis
o Regulatory uses (such as financial health of bank and insurance
companies)
o Estimate the value of the company
- Financial Statements
o Balance Sheet
▪ List as of a point in time
▪ Resources (assets)
▪ Obligations (liabilities)
o Income Statement
▪ For a period of time (such as a year)
▪ How much profit did we make?
o Statement of Cash Flows
▪ For a period of time (such as a year)
▪ Where did our cash come from?
▪ Where did our cash go?
- Key External Users
o Lenders
▪ Will the loan be repaid?
▪ Current income?
▪ Existing obligations
▪ Existing assests
o Investors
▪ Is the business profitable now?
▪ What is the potential for the future?
- Who uses account information?
o Management of the company
▪ planning, daily monitoring, evaluation
▪ uses both managerial and financial accounting
- Accounting related organizations
o FASB (Financial Accounting Standards Board)
▪ Private group (NOT a government agency)
▪ People experienced in business and accounting
▪ PUBLIC PROCESS
▪ No legal authority
