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Types of Accounting quiz #1 Flashcards

Types of Accounting quiz #1
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  • What is the primary purpose of financial accounting?
    The primary purpose of financial accounting is to create information for external users such as investors, creditors, and the government to help them make informed decisions.
  • Who are considered external users of financial accounting information?
    External users include investors, creditors (like banks), and the government.
  • Which set of standards does financial accounting in the United States follow?
    Financial accounting in the United States follows Generally Accepted Accounting Principles (GAAP).
  • Who is responsible for setting GAAP in the United States?
    The Financial Accounting Standards Board (FASB) is responsible for setting GAAP in the United States.
  • What is the international equivalent of GAAP?
    The international equivalent of GAAP is the International Financial Reporting Standards (IFRS).
  • Which organization sets the International Financial Reporting Standards (IFRS)?
    The International Accounting Standards Board (IASB) sets the IFRS.
  • What is the main focus of managerial accounting?
    Managerial accounting focuses on generating information for internal users, such as management and marketing departments, to aid in decision-making and operational efficiency.
  • Are there standardized laws or guidelines for managerial accounting?
    No, managerial accounting does not have standardized laws or guidelines because it is used internally within the company.
  • Give an example of how management might use managerial accounting information.
    Management might use managerial accounting information to determine the cost per unit produced or to help with budgeting and planning.
  • Why does the government require financial accounting information from companies?
    The government requires financial accounting information to determine how much tax a company owes.
  • How does financial accounting differ from managerial accounting in terms of users?
    Financial accounting is for external users, while managerial accounting is for internal users.
  • Why are there no legal requirements for managerial accounting reports?
    There are no legal requirements for managerial accounting reports because they are used only within the company and not reported to external parties.
  • What type of accounting would a marketing department use to plan a campaign?
    A marketing department would use managerial accounting to plan a campaign.
  • Which type of accounting is the focus of most introductory accounting courses?
    Most introductory accounting courses focus on financial accounting.
  • What is the main difference between GAAP and IFRS?
    GAAP is used in the United States and set by FASB, while IFRS is used internationally and set by IASB.