Financial and Managerial Accounting Question and Answers 2024

Financial and Managerial Accounting Question and Answers 2024 What is the accounting equation? - Assets = Liability + Owners' Equity Please explain the 3 parts of the accounting equation - Assets = Cash, Accounts Receivable (AR), trademarks/patents, investments Liabilities = claims by debtors, Accounts Payable (AP) Equity = claims by the owner Debit is always on the _________ and Credit is always on the _________. - Debit is on the LEFT and credit is on the RIGHT. Who is the "father of accounting" and in what year did he publish his book? - Luca Pacioli Summa de arithmetica - 1494 Why do we need accounting? - To discover financial inconsistencies, fraud Analyze and predict budgets Compare different companies' financial reporting and performance Define "accounting" - A way of recording, analyzing and summarizing transactions of a business. What is the "language" of accounting? - Double entry bookkeeping What is the idea of double entry? - The idea is that each entry is written down twice - Debit and Credit What are the three main steps of accounting? - 1. Recording the information 2. Ledgers 3. Financial statements Cost and management accounting is concerned with providing management information concerning what? - 1. Planning 2. Control 3. Making decisions What are some of the roles of Managerial Accounting? - Cost accounting Budgeting Making management decisions Evaluating performance Budgeting for capital costs and making decisions Price formation What are some of the roles of Managing Finance? - Planning and managing cash flows, including currency flows Long-term financing decisions Managing financial risks Financing for investments Managing working capital What are some of aspects of preparing financial statements? - Financial reports Tax reports and calculations Providing other info. for external users Who are the users of information of FA? - Shareholders, investors, banks, suppliers, credit institutions, tax collectors, company employees and other EXTERNAL users Who are the user of information of MA? - Management of different levels WITHIN the company - president, shop foreman, etc. What regulation(s) must be followed in FA? - Accounting is strictly regulated by external standard such as IFRS. What regulation(s) must be followed in MA? - The managers themselves decide the accounting methods. What degree of accuracy in required in FA? - The data must be fair and accurate. What degree of accuracy in required in MA? - Approximate values are acceptable as long as they are sufficient for management decisions. What is the scope of accounting in FA? - Activities of the ENTIRE organization What is the scope of accounting in MA? - Whatever the manager decides - separate segments, areas of production, subdivisions, market areas What are the measures of accounting information in FA? - Cost and monetary What are the measures of accounting information in MA? - Cost, in kind, labor What is the information base in FA? - Information about actual facts What is the information base in MA? - Both factual, standard and plans, as well as forecasts What is the frequency of information provided in FA? - Quarterly, annually