D196 – Principles of Financial and Managerial Accounting: Study Guide
Course Overview
This course will provide you with a foundational understanding of how accounting
impacts you as a business professional. From budgets and performance reports to cost
analyses and approaches to decision making, Accounting impacts them all. Principles of
Accounting will introduce you to how things are done in the business environment
today. As the “language of business,” this course will give you an insider’s view of both
financial and managerial accounting, both of which will be essential to your success in
whatever path you take in the global economy of today and the future.
UNIT 2: (Competency Weight 15%)
Accounting Information (Module 1 – Approximately 5% of OA) – Complete the
following activities:
Read/Listen to all the module content. Watch all the embedded videos.
Complete all the Knowledge Checks.
Complete the Module 1 quiz.
You should be able to answer the following questions after studying this module:
· What is the role and purpose of Accounting?
o “Language of Business”
o Accumulate, measure and communicate financial information
o Used in the decision-making process
o Analyze, Bookkeep, and Evaluate
· Who uses accounting information and why?
o Management uses both types of accounting
o Managerial Accounting = Internal
§ Key Users: management, suppliers and customers, and employees
§ Used for:
· Product Cost
· Break Even Analysis
· Budgeting
· Performance Evaluation
o Financial Accounting = External
§ Key Users: Lenders & Investors (others: Government Agencies & Competitors)
,§ Used For:
· Credit Analysis
· Regulatory Uses (Government keeps track of Banks and Insurance Companies)
· Estimate Value of Company
§ 3 primary financial statements:
· Balance Sheet: Reports the resources of a company (the assets), the company’s
obligations (the liabilities), and the owners’ equity, which represents the difference
between what is owned (assets) and what is owed (liabilities).
· Income Statement: Reports the amount of net income earned by a company during
a period.
· Statement of Cash Flows: Reports the amount of cash collected and paid out by a
company in the following three types of activities: operating, investing, and financing.
· What are the important influences on Accounting?
o In the US, accounting standards for publicly listed companies are set by the Financial
Accounting Standards Board (FASB)
§ The organization responsible for studying accounting issues and establishing
accounting standards to govern financial reporting in the United States.
§ Not a government agency but a private body
· Has no legal power to enforce the standards they set
· Made up of 7 experts in the field of accounting and business
§ Public Process – seeks consensus by requesting written comments and sponsoring
public hearings on all its proposed standards
§ End Result of public procees is GAAP (Generally Accepted Accounting Principles) - set
of accounting rules
o Governmental Accounting Standards Board (GASB)
§ sets the accounting and financial reporting standards for state and local governments
following GAAP
§ Also a private body like FASB
o Other Organizations:
§ SEC (Securities and Exchange Commission)
· US Federal Governemnt Agency
· has the legal authority to set the accounting rules in the US
, § AICPA (American Institute of Certified Public Accountants)
· the professional association of Certified Public Accountants (CPAs) in the US
§ IRS (Internal Revenue Service)
· US government agency that collects and regulates income taxes
· DOES NOT set financial accounting rules
· DOES sets income tax rules
§ IASB (International Accounting Standards Board)
· the FASB for the whole world
· Follows a very similar process to the FASB
· Based in London
· What is the role of ethics in accounting?
o Ethics are the basic moral principles that govern an individual’s behavior, including
how an individual conducts him or herself in a business-related activity.
o Accountants need to remain ethical because they are the scorekeeper and can’t be
biased.
o Ethics is enforced by:
§ SEC with legal punishments
§ AICPA with professional sanctions (losing CPA license)
§ Business Community with losing credibility (cannot find another job without credibility)
o Maintaining high ethical standards in important because accounting decisions often
impact real-world economic decisions.
The Accounting Cycle (Module 2 - Approximately 10% of OA) – Complete the
following activities:
Read/Listen to all the module content. Watch all the embedded videos.
Complete all the Knowledge Checks.
Complete the Module 2 quiz.
You should be able to answer the following questions after studying this module:
· What is the Accounting Cycle and how does it work?
o Accounting Cycle, or the bookkeeping part of accounting, is the procedure for
analyzing, recording, summarizing, and reporting the transactions of a business.
Course Overview
This course will provide you with a foundational understanding of how accounting
impacts you as a business professional. From budgets and performance reports to cost
analyses and approaches to decision making, Accounting impacts them all. Principles of
Accounting will introduce you to how things are done in the business environment
today. As the “language of business,” this course will give you an insider’s view of both
financial and managerial accounting, both of which will be essential to your success in
whatever path you take in the global economy of today and the future.
UNIT 2: (Competency Weight 15%)
Accounting Information (Module 1 – Approximately 5% of OA) – Complete the
following activities:
Read/Listen to all the module content. Watch all the embedded videos.
Complete all the Knowledge Checks.
Complete the Module 1 quiz.
You should be able to answer the following questions after studying this module:
· What is the role and purpose of Accounting?
o “Language of Business”
o Accumulate, measure and communicate financial information
o Used in the decision-making process
o Analyze, Bookkeep, and Evaluate
· Who uses accounting information and why?
o Management uses both types of accounting
o Managerial Accounting = Internal
§ Key Users: management, suppliers and customers, and employees
§ Used for:
· Product Cost
· Break Even Analysis
· Budgeting
· Performance Evaluation
o Financial Accounting = External
§ Key Users: Lenders & Investors (others: Government Agencies & Competitors)
,§ Used For:
· Credit Analysis
· Regulatory Uses (Government keeps track of Banks and Insurance Companies)
· Estimate Value of Company
§ 3 primary financial statements:
· Balance Sheet: Reports the resources of a company (the assets), the company’s
obligations (the liabilities), and the owners’ equity, which represents the difference
between what is owned (assets) and what is owed (liabilities).
· Income Statement: Reports the amount of net income earned by a company during
a period.
· Statement of Cash Flows: Reports the amount of cash collected and paid out by a
company in the following three types of activities: operating, investing, and financing.
· What are the important influences on Accounting?
o In the US, accounting standards for publicly listed companies are set by the Financial
Accounting Standards Board (FASB)
§ The organization responsible for studying accounting issues and establishing
accounting standards to govern financial reporting in the United States.
§ Not a government agency but a private body
· Has no legal power to enforce the standards they set
· Made up of 7 experts in the field of accounting and business
§ Public Process – seeks consensus by requesting written comments and sponsoring
public hearings on all its proposed standards
§ End Result of public procees is GAAP (Generally Accepted Accounting Principles) - set
of accounting rules
o Governmental Accounting Standards Board (GASB)
§ sets the accounting and financial reporting standards for state and local governments
following GAAP
§ Also a private body like FASB
o Other Organizations:
§ SEC (Securities and Exchange Commission)
· US Federal Governemnt Agency
· has the legal authority to set the accounting rules in the US
, § AICPA (American Institute of Certified Public Accountants)
· the professional association of Certified Public Accountants (CPAs) in the US
§ IRS (Internal Revenue Service)
· US government agency that collects and regulates income taxes
· DOES NOT set financial accounting rules
· DOES sets income tax rules
§ IASB (International Accounting Standards Board)
· the FASB for the whole world
· Follows a very similar process to the FASB
· Based in London
· What is the role of ethics in accounting?
o Ethics are the basic moral principles that govern an individual’s behavior, including
how an individual conducts him or herself in a business-related activity.
o Accountants need to remain ethical because they are the scorekeeper and can’t be
biased.
o Ethics is enforced by:
§ SEC with legal punishments
§ AICPA with professional sanctions (losing CPA license)
§ Business Community with losing credibility (cannot find another job without credibility)
o Maintaining high ethical standards in important because accounting decisions often
impact real-world economic decisions.
The Accounting Cycle (Module 2 - Approximately 10% of OA) – Complete the
following activities:
Read/Listen to all the module content. Watch all the embedded videos.
Complete all the Knowledge Checks.
Complete the Module 2 quiz.
You should be able to answer the following questions after studying this module:
· What is the Accounting Cycle and how does it work?
o Accounting Cycle, or the bookkeeping part of accounting, is the procedure for
analyzing, recording, summarizing, and reporting the transactions of a business.
