Introduction to Financial Accounting Concepts and
Practices Exam Questions and Answers
Accounting
The process of identifying, measuring, and communicating economic information about an entity and its
transactions to a variety of users for decision making purposes.
Financial Accounting
Preparation and presentation of financial statements to allow users to make economic decisions about
an entity.
Financial Statements
A set of statements including cash flows, income statement, balance sheet, changes in equity, and notes
to the accounts.
Management Accounting
Economic information for internal users only, focused on planning and decision making for future
business events.
IFRS
International financial reporting standards.
CPA
Certified practicing accountant.
CA
,Chartered accountant.
Transaction
An external change of something of value between 2 or more entities that affects assets, liabilities, and
equity.
Accounting Information System
A system that records transactions and relevant economic information, like Xero.
Internal Users
Users of accounting information who are part of the entity, such as owners and management.
External Users
Users of accounting information who are outside the entity, such as shareholders, customers, banks,
suppliers, and authorities.
Stakeholders
Individuals or groups who have an interest in the business and are concerned with its published
accounts and data.
GAAP
Globally accepted accounting processes that govern financial accounting.
, Differences between FA and MA
FA is bound by GAAP and reflects the past, while MA is less formal, more flexible, and can include
projections.
Elements of Accounting
Five elements: assets, liabilities, equity (on the balance sheet), and income and expenses (on the income
statement).
Published Accounts
Financial statements published by corporations at the end of every financial year, usually on the 31st of
March.
Economic Information
Information related to money and changes in it, used for decision making.
Users of Financial Statements
Individuals or entities that utilize financial statements to make informed economic decisions.
Investment Analysts
Stakeholders who analyze financial data to advise clients on investments.
Planning and Decision Making
The process in management accounting that involves creating plans and budgets for future business
activities.
Practices Exam Questions and Answers
Accounting
The process of identifying, measuring, and communicating economic information about an entity and its
transactions to a variety of users for decision making purposes.
Financial Accounting
Preparation and presentation of financial statements to allow users to make economic decisions about
an entity.
Financial Statements
A set of statements including cash flows, income statement, balance sheet, changes in equity, and notes
to the accounts.
Management Accounting
Economic information for internal users only, focused on planning and decision making for future
business events.
IFRS
International financial reporting standards.
CPA
Certified practicing accountant.
CA
,Chartered accountant.
Transaction
An external change of something of value between 2 or more entities that affects assets, liabilities, and
equity.
Accounting Information System
A system that records transactions and relevant economic information, like Xero.
Internal Users
Users of accounting information who are part of the entity, such as owners and management.
External Users
Users of accounting information who are outside the entity, such as shareholders, customers, banks,
suppliers, and authorities.
Stakeholders
Individuals or groups who have an interest in the business and are concerned with its published
accounts and data.
GAAP
Globally accepted accounting processes that govern financial accounting.
, Differences between FA and MA
FA is bound by GAAP and reflects the past, while MA is less formal, more flexible, and can include
projections.
Elements of Accounting
Five elements: assets, liabilities, equity (on the balance sheet), and income and expenses (on the income
statement).
Published Accounts
Financial statements published by corporations at the end of every financial year, usually on the 31st of
March.
Economic Information
Information related to money and changes in it, used for decision making.
Users of Financial Statements
Individuals or entities that utilize financial statements to make informed economic decisions.
Investment Analysts
Stakeholders who analyze financial data to advise clients on investments.
Planning and Decision Making
The process in management accounting that involves creating plans and budgets for future business
activities.
