TUTORIAL WORK
D196 PRINCIPLES OF FINANCIAL AND MANAGERIAL ACCOUNTING(WGU)
, D196 Principles of Financial and Managerial Accounting
The graduate identifies the role of accounting information and the purpose of the accounting cycle in
decision-making
Module 1 Lesson 1: Describe the purpose and users of accounting information
Accounting a system used for providing “quantitative information (financial) about economic entities
intended to be useful in making economic decisions
- Quantitative: numbers
- Financial: money
- Useful: accounting only exists because it is useful
- Decisions: past information can still be useful and can impact decisions about the future
Accounting involves 3 basic functions
- Analysis (determining if information should be tracked by the accounting system)
- Bookkeeping (day to day keeping track of transactions)
- Evaluation (obtaining and using financial information to determine the health and performance
of a business)
Decision-Making Process
- Step 1: Identify the issue
- Step 2: Gather information
- Step 3: Identify Alternatives
- Step 4: Select the option that will most likely result in the desired objective
Capital comes from three sources:
- Investors (owners)
- Creditors (lenders), and
- The business in the form of earnings
Accountants play two roles:
- Measuring and reporting: measure and report the results of business activities. Accountants
follow the standard set of procedures referred to as the accounting cycle.
o Financial Accounting Cycle ASRP
▪ Analyze transactions
▪ Record effects of transactions
, ▪ Summarise effects of transactions
▪ Prepare reports – so that we have numbers that we can evaluate
- Advising: advise managers on how to achieve business goals such as generating profit,
minimizing costs, providing efficient services
Module 1 Lesson 2: Identify users of accounting information
Accounting System Output
The two primary areas of accounting are Managerial Accounting & Financial Accounting:
- Managerial Accounting (internal)
o Product costs
o Breakeven analysis
o Budgeting
o Performance evaluation
o Outsource production
- Financial Accounting (external)
o Credit analysis
o Regulatory uses (such as financial health of bank and insurance companies)
, 3 General-Purpose Financial Statements – for people OUTSIDE the business:
- Balance Sheet – list as of a point in time (a second)
o Reports the resources of a company (the assets)
o The company’s obligations (the liabilities)
o The owners’ equity
- Income statement – for a period of time (week/month/year); reports the amount of net income
earned
- Statement of cash flows – for a period of time (week/month/year); reports the amount of cash
collected and paid out
o Operating
o Investing
o Financing
External Stakeholders – Key External Users of Financial Accounting Data
Lenders (creditors) Investors
- Being repaid, with interest - How much cash they can expect to
- Use companies’ financial statements in receive in the future if they invest in a
making decisions about commercial loans business now
- Predict the ability of the borrower to repay - Aid investors in assessing future cash
the loan flows
Competitors Federal, State, and Local Government Agencies
- Identify strategic opportunities for - Make sure that investors have sufficient
marketing efforts where potential profits information to make informed
are high or where your competitor is weak investment decisions
D196 PRINCIPLES OF FINANCIAL AND MANAGERIAL ACCOUNTING(WGU)
, D196 Principles of Financial and Managerial Accounting
The graduate identifies the role of accounting information and the purpose of the accounting cycle in
decision-making
Module 1 Lesson 1: Describe the purpose and users of accounting information
Accounting a system used for providing “quantitative information (financial) about economic entities
intended to be useful in making economic decisions
- Quantitative: numbers
- Financial: money
- Useful: accounting only exists because it is useful
- Decisions: past information can still be useful and can impact decisions about the future
Accounting involves 3 basic functions
- Analysis (determining if information should be tracked by the accounting system)
- Bookkeeping (day to day keeping track of transactions)
- Evaluation (obtaining and using financial information to determine the health and performance
of a business)
Decision-Making Process
- Step 1: Identify the issue
- Step 2: Gather information
- Step 3: Identify Alternatives
- Step 4: Select the option that will most likely result in the desired objective
Capital comes from three sources:
- Investors (owners)
- Creditors (lenders), and
- The business in the form of earnings
Accountants play two roles:
- Measuring and reporting: measure and report the results of business activities. Accountants
follow the standard set of procedures referred to as the accounting cycle.
o Financial Accounting Cycle ASRP
▪ Analyze transactions
▪ Record effects of transactions
, ▪ Summarise effects of transactions
▪ Prepare reports – so that we have numbers that we can evaluate
- Advising: advise managers on how to achieve business goals such as generating profit,
minimizing costs, providing efficient services
Module 1 Lesson 2: Identify users of accounting information
Accounting System Output
The two primary areas of accounting are Managerial Accounting & Financial Accounting:
- Managerial Accounting (internal)
o Product costs
o Breakeven analysis
o Budgeting
o Performance evaluation
o Outsource production
- Financial Accounting (external)
o Credit analysis
o Regulatory uses (such as financial health of bank and insurance companies)
, 3 General-Purpose Financial Statements – for people OUTSIDE the business:
- Balance Sheet – list as of a point in time (a second)
o Reports the resources of a company (the assets)
o The company’s obligations (the liabilities)
o The owners’ equity
- Income statement – for a period of time (week/month/year); reports the amount of net income
earned
- Statement of cash flows – for a period of time (week/month/year); reports the amount of cash
collected and paid out
o Operating
o Investing
o Financing
External Stakeholders – Key External Users of Financial Accounting Data
Lenders (creditors) Investors
- Being repaid, with interest - How much cash they can expect to
- Use companies’ financial statements in receive in the future if they invest in a
making decisions about commercial loans business now
- Predict the ability of the borrower to repay - Aid investors in assessing future cash
the loan flows
Competitors Federal, State, and Local Government Agencies
- Identify strategic opportunities for - Make sure that investors have sufficient
marketing efforts where potential profits information to make informed
are high or where your competitor is weak investment decisions
