managerial
accounting[ intermidiate]
exam level 1 2025**
Managerial Accounting - ANSWERS-The process of identifying, measuring, analyzing, and
communicating financial information needed by management to plan, control, and evaluate a
company's operations.
Financial Accounting - ANSWERS-The process that culminates in the preparation of financial
reports on the enterprise for use by both internal and external parties. Users include investors,
creditors, managers, unions, and government entities.
Essential characteristics of accounting - ANSWERS-(1) The identification, measurement, and
communication of financial information about (2) economic entities to (3) interested parties.
Objective of financial reporting - ANSWERS-The objective of general-purpose financial reporting
is to provide financial information about the reporting entity that is useful to present and
potential equity investors, lenders, and other creditors in decisions about providing resources to
the entity.
General-purpose financial statements provide: - ANSWERS-at the least cost the most useful
information possible.
, Primary users of general-purpose financial statements: - ANSWERS-investors and creditors.
*Primary user groups are not management, regulators, or some other non-investor groups.
Entity perspective: - ANSWERS-companies are viewed as separate and distinct from their
owners (present shareholders).
investors are interested in: - ANSWERS-(1) the company's ability to generate net cash inflows
and (2) management's ability to protect and enhance the capital providers' investments.
Accrual-basis accounting: - ANSWERS-ensures that a company records events that change its
financial statements in the period in which the events occur, rather than only in the periods in
which it receives or pays cash. A company:
(1) Recognizes revenues when it provides the goods or services rather than when it receives
cash.
(2) Recognizes expenses when it incurs them rather than when it pays them.
"Generally accepted" - ANSWERS-Means either that an authoritative accounting rule-making
body has established a principle of reporting in a given area or that over time a given practice
has been accepted as appropriate because of its universal application.
Three organizations that are instrumental in the development of financial accounting standards
(GAAP) in the United States: - ANSWERS-1. SEC
2. AICPA
3. FASB
accounting[ intermidiate]
exam level 1 2025**
Managerial Accounting - ANSWERS-The process of identifying, measuring, analyzing, and
communicating financial information needed by management to plan, control, and evaluate a
company's operations.
Financial Accounting - ANSWERS-The process that culminates in the preparation of financial
reports on the enterprise for use by both internal and external parties. Users include investors,
creditors, managers, unions, and government entities.
Essential characteristics of accounting - ANSWERS-(1) The identification, measurement, and
communication of financial information about (2) economic entities to (3) interested parties.
Objective of financial reporting - ANSWERS-The objective of general-purpose financial reporting
is to provide financial information about the reporting entity that is useful to present and
potential equity investors, lenders, and other creditors in decisions about providing resources to
the entity.
General-purpose financial statements provide: - ANSWERS-at the least cost the most useful
information possible.
, Primary users of general-purpose financial statements: - ANSWERS-investors and creditors.
*Primary user groups are not management, regulators, or some other non-investor groups.
Entity perspective: - ANSWERS-companies are viewed as separate and distinct from their
owners (present shareholders).
investors are interested in: - ANSWERS-(1) the company's ability to generate net cash inflows
and (2) management's ability to protect and enhance the capital providers' investments.
Accrual-basis accounting: - ANSWERS-ensures that a company records events that change its
financial statements in the period in which the events occur, rather than only in the periods in
which it receives or pays cash. A company:
(1) Recognizes revenues when it provides the goods or services rather than when it receives
cash.
(2) Recognizes expenses when it incurs them rather than when it pays them.
"Generally accepted" - ANSWERS-Means either that an authoritative accounting rule-making
body has established a principle of reporting in a given area or that over time a given practice
has been accepted as appropriate because of its universal application.
Three organizations that are instrumental in the development of financial accounting standards
(GAAP) in the United States: - ANSWERS-1. SEC
2. AICPA
3. FASB
