MIE 201 exam #5 Questions With Solutions
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accounting is the recording, measurement, and interpretation of financial information.
certified public accountant (CPA) an individual who has been certified by the state in
which he or she practices to provide accounting services ranging from the preparation of
financial records and the filing of tax returns to complex audits of corporate financial records
forensic accounting which is accounting that is fit for legal review. It involves analyzing
financial documents in search of fraudulent entries or financial misconduct.
private accountants Large corporations, government agencies, and other organizations
may employ their own ____________________ to prepare and analyze their financial
statements. With titles such as controller, tax accountant, or internal auditor, are deeply involved
in many of the most important financial decisions of the organizations for which they work.
certified management accountants (CMAs) Private accountants can be CPAs and may
become ______________________________ by passing a rigorous examination by the Institute
of Management Accountants.
, MIE 201 exam #5 Questions With Solutions
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bookkeeping is typically limited to the routine, day-to-day recording of business
transactions. These people are responsible for obtaining and recording the information that
accountants require to analyze a firm's financial position. They generally require less training
than accountants.
Accountants on the other hand, usually complete course work beyond their basic four- or
five-year college accounting degrees. This additional training allows accountants not only to
record financial information, but to understand, interpret, and even develop the sophisticated
accounting systems necessary to classify and analyze complex financial information.
financial statements managers and owners use ______________________
(1) to aid in internal planning and control and
(2) for external purposes such as reporting to the Internal Revenue Service, stockholders,
creditors, customers, employees, and other interested parties.
evaluate the return on stockholders' investments and the overall quality of the firm's management
team. As a result, poor performance, as documented in the financial statements, often results in
changes in top management.
, MIE 201 exam #5 Questions With Solutions
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Managerial accounting refers to the internal use of accounting statements by managers in
planning and directing the organization's activities. Cash flow is a large concern
cash flow Perhaps management's greatest single concern is ____________________ the
movement of money through an organization over a daily, weekly, monthly, or yearly basis.
budget Managerial accountants also help prepare an organization's ________________,
an internal financial plan that forecasts expenses and income over a set period of time. It is not
unusual for an organization to prepare separate daily, weekly, monthly, and yearly budgets. Think
of this as a financial map, showing how the company expects to move from Point A to Point B
over a specific period of time
master budgets While most companies prepare _____________ for the entire firm, many
also prepare budgets for smaller segments of the organization such as divisions, departments,
product lines, or projects.
"Top-down" master budgets begin at the upper management level and filter down to the
individual department level,
, MIE 201 exam #5 Questions With Solutions
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"bottom-up" budgets start at the department or project level and are combined at the chief
executive's office. Generally, the larger and more rapidly growing an organization, the greater
will be the likelihood that it will build its master budget from the ground up.
External Uses: Managers also use accounting statements to report the business's financial
performance to outsiders. Such statements are used for filing income taxes, obtaining credit from
lenders, and reporting results to the firm's stockholders. They become the basis for the
information provided in the official corporate annual report
annual report a summary of the firm's financial information, products, and growth plans
for owners and potential investors. While frequently presented between slick, glossy covers, the
single most important component of this is the signature of a certified public accountant attesting
that the required financial statements are an accurate reflection of the underlying financial
condition of the firm.
audited Financial statements meeting these conditions are termed ________________The
primary external users of audited accounting information are government agencies, stockholders
and potential investors, lenders, suppliers, and employees.
