ACG 2021 Study Guide - Comprehensive Midterm Guide: Cash Flow, Retained Earnings, Financial Accounting
Document Summary
Accounting information and decision making: accounting as a measurement/communication process a. i. Accounting: the language of business ; a system of maintaining records of a company"s operations and communicating that information to decision makers a. i. 2. The functions of accounting are to measure the activities of the company and communicate those measurements to people. a. i. 3. Managerial accounting: deals with the methods accountants use to provide information to an organization"s internal users (own managers) a. i. 4. Financial accounting: measure business activities of a company and to communicate those measurements to external parties for decision-making purposes a. i. 4. a. The two primary external users (users outside the firm) of financial accounting are investors and creditors. a. i. 4. b. Investors: make decisions related to buying and selling the company"s stock (shared of ownership); ask if a company is profitable a. i. 4. c. Creditors: make decisions related to lending money to the company; will the company be able to repay its debt when it comes due? a. ii.
