Accounting for Decision Makers - C213 Exam Study
Guide Review with Correct Answers
Bookkeeping - Exact Answer is the preservation of a systematic,
quantitative record of an activity
Accounting - Exact Answer A system of providing "quantitative
information, primarily financial in nature, about economic entities that
is intended to be useful in making economic decisions."
The key features of this definition are the following:
Numbers: Accounting is quantitative. This is a strength because
numbers can be easily tabulated and summarized. It is a weakness
because some important business events, such as a toxic waste spill and
the associated lawsuits and countersuits, cannot be easily described by
one or two numbers.
A financial dimension: The status and performance of a business is
affected by and reflected in many dimensions—financial, personal
relationships, community and environmental impact, and public image.
Accounting focuses on just the financial dimension.
Usefulness: The practice of accounting is supported by a long tradition
of theory; U.S. accounting rules in fact have a theoretical conceptual
framework, and some people actually make a living as accounting
,Accounting for Decision Makers - C213 Exam Study
Guide Review with Correct Answers
theorists. However, in spite of its theoretical beauty, accounting exists
only because it is useful.
Future decisions based on past information: Although accounting is the
structured reporting of what has already occurred, this past information
can only be useful if it impacts decisions about the future.
financial accounting - Exact Answer which is the name given to
accounting information provided for and used by external users.
Managerial accounting - Exact Answer the name given to accounting
systems designed for internal users
financial statements - Exact Answer The three primary financial
information documents: the balance sheet, income statement, and
statement of cash flows.
balance sheet - Exact Answer reports the resources of a company (the
assets), the company's obligations (the liabilities), and the owners'
equity, which represents how much money has been invested in the
company by its owners.
,Accounting for Decision Makers - C213 Exam Study
Guide Review with Correct Answers
income statement - Exact Answer This document reports the amount of
net income earned by a company during a period, with annual and
quarterly income statements being the most common.
statement of cash flows - Exact Answer This document reports the
amount of cash collected and paid out by a company in the following
three types of activities: operating, investing, and financing.
The emphasis in financial accounting is on which of the following
external user groups? - Exact Answer Investors and creditors
The primary internal group that uses accounting information is - Exact
Answer Management
Internal reports are generally used by - Exact Answer Management
Which of the following is NOT an external user of financial information?
- Exact Answer Management
, Accounting for Decision Makers - C213 Exam Study
Guide Review with Correct Answers
accounting standards are set by the? - Exact Answer Financial
Accounting Standards Board (FASB). The FASB is based in Norwalk,
Connecticut; its seven full-time members are selected from a variety of
backgrounds—professional accounting, business, government, and
academia. FASB is not a government agency, it lacks the legal power to
enforce the accounting standards it sets.
Generally Accepted Accounting Principles (GAAP) - Exact Answer a set
of accounting standards that is used in the preparation of financial
statements
Which of the following is NOT true of the Financial Accounting
Standards Board (FASB)? - Exact Answer It is a government agency
Generally accepted accounting principles are - Exact Answer Developed
by accounting rule makers
The initials GAAP stand for - Exact Answer Generally Accepted
Accounting Principles
Guide Review with Correct Answers
Bookkeeping - Exact Answer is the preservation of a systematic,
quantitative record of an activity
Accounting - Exact Answer A system of providing "quantitative
information, primarily financial in nature, about economic entities that
is intended to be useful in making economic decisions."
The key features of this definition are the following:
Numbers: Accounting is quantitative. This is a strength because
numbers can be easily tabulated and summarized. It is a weakness
because some important business events, such as a toxic waste spill and
the associated lawsuits and countersuits, cannot be easily described by
one or two numbers.
A financial dimension: The status and performance of a business is
affected by and reflected in many dimensions—financial, personal
relationships, community and environmental impact, and public image.
Accounting focuses on just the financial dimension.
Usefulness: The practice of accounting is supported by a long tradition
of theory; U.S. accounting rules in fact have a theoretical conceptual
framework, and some people actually make a living as accounting
,Accounting for Decision Makers - C213 Exam Study
Guide Review with Correct Answers
theorists. However, in spite of its theoretical beauty, accounting exists
only because it is useful.
Future decisions based on past information: Although accounting is the
structured reporting of what has already occurred, this past information
can only be useful if it impacts decisions about the future.
financial accounting - Exact Answer which is the name given to
accounting information provided for and used by external users.
Managerial accounting - Exact Answer the name given to accounting
systems designed for internal users
financial statements - Exact Answer The three primary financial
information documents: the balance sheet, income statement, and
statement of cash flows.
balance sheet - Exact Answer reports the resources of a company (the
assets), the company's obligations (the liabilities), and the owners'
equity, which represents how much money has been invested in the
company by its owners.
,Accounting for Decision Makers - C213 Exam Study
Guide Review with Correct Answers
income statement - Exact Answer This document reports the amount of
net income earned by a company during a period, with annual and
quarterly income statements being the most common.
statement of cash flows - Exact Answer This document reports the
amount of cash collected and paid out by a company in the following
three types of activities: operating, investing, and financing.
The emphasis in financial accounting is on which of the following
external user groups? - Exact Answer Investors and creditors
The primary internal group that uses accounting information is - Exact
Answer Management
Internal reports are generally used by - Exact Answer Management
Which of the following is NOT an external user of financial information?
- Exact Answer Management
, Accounting for Decision Makers - C213 Exam Study
Guide Review with Correct Answers
accounting standards are set by the? - Exact Answer Financial
Accounting Standards Board (FASB). The FASB is based in Norwalk,
Connecticut; its seven full-time members are selected from a variety of
backgrounds—professional accounting, business, government, and
academia. FASB is not a government agency, it lacks the legal power to
enforce the accounting standards it sets.
Generally Accepted Accounting Principles (GAAP) - Exact Answer a set
of accounting standards that is used in the preparation of financial
statements
Which of the following is NOT true of the Financial Accounting
Standards Board (FASB)? - Exact Answer It is a government agency
Generally accepted accounting principles are - Exact Answer Developed
by accounting rule makers
The initials GAAP stand for - Exact Answer Generally Accepted
Accounting Principles
