Intermediate Accounting Exam #1 Questions and Answers 100% Accurate!

The process that culminates in the preparation of financial reports on the enterprise for use by both internal and external parties - ANSWER-Financial accounting The process of identifying, measuring, analyzing, and communicating financial information needed by management to plan, control, and evaluate a company's operations - ANSWER-Managerial accounting What are the 4 types of financial statements? - ANSWER-1. Balance sheet 2. Income statement 3. Statement of cash flows 4. Statement of owners or stockholders equity Examples include the president's letter or supplementary schedules in the corporate annual report, prospectuses, reports filed with government agencies, news releases, management's forecasts, and social or environmental impact statements - ANSWER-Financial reporting The financial information a company provides to help users with capital allocation decisions about the company - ANSWER-Financial reporting Investors and creditors use financial reports to make their capital allocation decisions - ANSWER-Users The process of determining how and at what cost is allocated among competing interests - ANSWER-Capital allocation What are the 3 steps of the Cost Allocation Process? - ANSWER-1. Financial reporting 2. Users 3. Capital allocation What is the objective of financial reporting? - ANSWER-To provide financial information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors Provide financial reporting information to a wide variety of users - ANSWER-General-purpose financial statements Provide at the least cost the most useful information possible - ANSWER-General-purpose financial statements Identifies investors and creditors as the primary users for general-purpose financial statements - ANSWER-The objective of financial reporting A perspective of general-purpose financial reporting where companies are viewed as separate and distinct from their owners or present shareholders - ANSWER-Entity perspective A perspective of general-purpose financial reporting that is focused only on the needs of the shareholders - ANSWER-Proprietary perspective An ap