+
Related Flashcards
Related Topics
Cards In This Set
| Front | Back |
|
What are the two functions of accounting?
|
(1) to measure the activities of the company and (2) to communicate those measurements to people.
|
|
Into what two broad categories can accounting be classified?
|
(1) managerial accounting and (2) financial accounting.
|
|
Define managerial accounting.
|
Managerial accounting deals with the methods accountants use to provide information to an organization's internal users; that is, its own managers.
|
|
Define financial accounting.
|
The two primary functions of financial accounting are (1) to measure business activities of a company and (2) to communicate those measurements to external parties for decision-making purposes.
|
|
Who are the two primary external users of financial accounting information?
|
(1) Investors and (2) creditors.
|
|
Define investor.
|
Investors make decisions related to buying and selling the company's stock (shares of ownership).
|
|
Define creditor.
|
Creditors make decisions related to lending money to the company.
|
|
Identify the three fundamental business activities that financial accounting measures.
|
(1) Financing activities, (2) investing activities, and (3) operating activities.
|
|
Define financing activities.
|
Financing activites are transactions involving external resources.
|
|
What are the two basic sources of external funding?
|
(1) Owners and (2) creditors.
|
|
Define investing activities.
|
Investing activities include the purchase and sale of (1) long-term resources such as land, buidlings, equipment, and machinery, and (2) any resources not directly related to a company's normal operations.
|
|
Define operating activities.
|
Operating activities include transactions that relate to the primary operations of the company, such as providing products and services to customers and the associated costs of doing so, like utilities, taxes, advertising, wages, rent, and maintenance.
|
|
Define corporation.
|
A corporation is an entity that is legally separate from its owners.
|
|
Define assets.
|
Assets are the resources owned by a company.
|
|
Define liabilities.
|
Liabilities are amounts owed to creditors.
|
