FAU ACER 1.1

Owners are not internal users of accounting data because

owners = investors. Owners are not typically involved in day to day operations and do not make decisions like managers (internal users) do.

Financial statements are prepared primarily for the benefit of

persons outside of the business organization.

Managerial accounting

- help people INSIDE the business (internal users) make decisions - usually tailor accounting reports to meet the needs of a SPECIFIC decision maker -Not required to follow GAAP or tax regulations -Confidential

Financial accounting

- help people OUTSIDE (external users) of the business make decisions - Not confidential - must follow GAAP - used in a wide variety of business decisions

tax accounting

- helps people determine how much is owed to the government for taxes

Accounting is the...... and helps people....

-Language of business - make decisions

3 types of accounting

-Tax -Managerial -Financial

In the phrase "generally accepted accounting principles," the words generally accepted mean that the principles:

Are understood and observed by all the participants in the financial reporting process.

It is the function of management accounting to perform the following activities, except:

Audited financial statements

Management accounting refers to the preparation and use of accounting information designed to meet the needs of decision makers outside the business organization (True or False)

False

The tailoring of an accounting report to meet the needs of a specific decision maker is more characteristic of financial accounting reports than of management accounting reports (True or False)

False

Generally accepted accounting principles are the "ground rules" used in the preparation of:

Financial Statements

GAAP stands for:

Generally Accepted Accounting Principles

The accounting standards and concepts used in the preparation of financial statements are called:

Generally accepted accounting principles

Although accounting information is used by a wide variety of external parties, financial reporting is primarily directed toward the informational needs of

Investors and creditors.

Management accountants primarily are concerned with developing information

Suited to the needs of decision makers within the organization

External users of accounting information have a financial interest in an entity but are not involved with the day-to-day operations of the enterprise (True of False)

True

Investors are individuals and other enterprises that have provided equity to the reporting enterprise (True or False)

True