ACCT1021 Chapter Notes - Chapter 1: Cash Flow Statement, International Financial Reporting Standards, Financial Accounting Foundation

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6 Sep 2016

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Managers or internal decision makers need information about the company"s business activities to manage the operating, investing, and financing activities of the firm. Stockholders and creditors or external decision makers need information about these same business activities to assess whether the company will be able to pay back its debts with interest and pay dividends. All businesses must have an accounting system that collects and processes financial information about an organization"s business activities and reports that information to decision makers. Accounting- an information system that measures, processes, and communicates information that is useful for decision making. Certain transactions that are economically important are not included in accounting statements. Exception: know how much something is worth (buy something) Classifies and analyzes information that is understandable and useful communicates. Outside users with a direct financial interest. Outside users with an indirect financial interest (government) Regulatory agencies (stock exchanges, sec, irs, commissions) Suppliers, customers (relationship because interested in knowing about the business)

Related Questions

1. Creditors' claims on the assets of a company are called: (Points : 2)

2. The primary objective of financial accounting is: (Points : 2)

To serve the decision-making needs of internal users

To provide financial statements to help external users analyze and interpret an organization's activities

To monitor and control company activitiesTo provide information on both the costs and benefits of managing products and services

To know what, when and how muchto produce

3. Assets created by selling goods and services on credit are: (Points : 2)

4. The debt ratio is used: (Points : 2)

To measure the amount of equity relative to the expenses

To reflect the risk associated with a company's debts

Only by banks when a business applies for a loan

To determine how much debt a firm should pay off

5. Net Income: (Points : 2)

Decreases equity

Represents the amount of assets owners put into a business

Equals assets minus liabilities

Is the excess of revenues over expenses

Represents the owners' claims against assets

6. Internal users of accounting information include: (Points : 2)

Shareholders

Customers

Creditors

Government regulators

Line Supervisor

7. Risk is: (Points : 2)

Net income divided by average total assets

The reward for investment

The uncertainty about the expected return that will be earned from an investment

Unrelated to expected return

8. An example of an operating activity is: (Points : 2)

Paying wages

Purchasing office equipment

Borrowing money from a bank

Selling stock

Paying off a loan

9. Which accounting assumption assumes that all accounting information is reported monthly or yearly? (Points : 2)

Business entity assumption

Monetary unit assumption

Value assumption

Cost assumption

Time period assumption

10. Distributions of assets by a business to its stockholders are called: (Points : 2)

1.________ is the field of accounting that develops informationfor external parties such as stockholders, suppliers, banks andgovernmental regulatory bodies.

A) Auditing

B) Internal auditing

C) Management accounting

D) Financial accounting

Answer:

Financial reports prepared by financial accountants focus on________. Financial reports prepared by management accountantsfocus on ________

A) segments of the organization such as departments anddivisions; segments of the organization such as departments anddivisions

B) the organization as a whole; the organization as a whole

C) the organization as a whole; segments of the organizationsuch as departments and divisions

D) segments of the organization such as departments anddivisions; the organization as a whole

Answer:

What are accounting systems?

A) The process used to streamline production processes

B) The process used to generate performance measures

C) Formal mechanisms for gathering, organizing and communicatinginformation about an organization's activities

D) none of the above

Answer:

A(n) ________ is a review to determine whether the policies andprocedures specified by top management have been implemented bylower managers.

A) management audit

B) internal audit

C) internal control

D) internal accounting control

Answer:

A budget ________.

A) is a quantitative expression of a plan of action

B) provides feedback by comparing actual results with plannedresults

C) includes deviations from planned results

D) ignores areas that are presumed to be running smoothly

rosemouse550

You work as a Management Accounting officer in a small andmedium organization operating in either a Manufacturing, Retail,Hospitality or Construction sector with not more than fifty (50)employees and an annual net turnover not exceeding Â£500,000.

Management accounting plays a key role in organizations todayand therefore decision makers in the organization must understandhow to create and use good management accounting information. Intodayâs business environment, business wants to track performanceinformation that goes beyond just the cost-based information ofhistoric general ledger systems provided by traditional financialaccounting information. Good management accounting involves aresponsibility to manage a wide variety of critical managementaccounting information using management accounting system andmanagement accounting techniques such as cost-volume- profitanalysis, marginal costing and absorption costing to producerelevant management report for informed decision making.

This was the summary of the speech delivered by a conferencespeaker about the role of management accounting and managementaccounting system in an organization. The General Manager of yourorganization sees management accounting function as very crucial inproviding management information well informed decision makingwithin the organization. Knowing that you are studying managementaccounting at the HND level, the organization sponsored you toattend this conference. After this conference the Generalmanagement has asked you (Management Accounting Officer) to write areport to him covering management accounting and managementaccounting system together with different costing techniques andreporting to enable the organization implement them.

Using the above scenario and in your capacity as ManagementAccounting Officer in your organisation, continue the word reportto the General Manager addressing other issues in managementaccounting function such as budgeting and budgetary control,performance indicators and variances to bolster his/her interest tomake the management accounting function in your organisation a fulldepartment rather than a unit. The fact that management accountingsystem could enable organisations identify financial problems toenable them adopt a strategy to investigate and address them madethe General Manager determined to place much importance toestablish the department. As Management AccountingOfficer, using various relevant management accountingmaterials such as news bulletin, stakeholder reports, the YouTube,twitter, academic articles, magazine, text books, websites,journals, newspapers, and other relevant resources, your report tothe General Manager should be convincing and compelling supportedwith relevant illustrations that would generate and preserve valuefor the organisation.

Explain the advantages and disadvantages of differenttypes of planning tools that can be used for budgetary control forthe chosen scenario. This should be supported with examples andillustrations. Compare how organisations (Scenario mentioned above)such as yours should adapt management accounting systems to respondto financial problems. This should be supported with examples andillustrations (1000 words). PLEASE NO PLAGIARISM

ACCT1021 Chapter Notes - Chapter 1: Cash Flow Statement, International Financial Reporting Standards, Financial Accounting Foundation

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