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MGAB01H3 Chapter 1: chapter 1

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26 Oct 2010

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MGAB01H3 Full Course Notes

MGAB01H3 Full Course Notes

Document Summary

Accounting j is the information system that identifies and records the economic events of an organization, and then communicates them to a wide variety of interested users. Internal users j they work for the company. These include finance directors, marketing managers, human resource personnel, production supervisors, and company officers. Accounting provides internal reports: financial comparisons of operating alternatives, projections of earnings from new sales campaigns, forecasts of cash needs for next year, analyses of sales costs, and budgets financial statements. External users j investors and creditors are the main external users of accounting information. Investors: is the company earning enough to give me a return on my investment. Creditors: will the company be able to pay its debts as they come due. Labour unions: can the company afford the pay raise we are asking for. Customers: will the company stay in business long enough to service the products i buy from it.

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Related Questions

What are the main objectives of comparative analysis and why arethey important to external users of the financial statements, suchas investors?

What are the main differences in the role of financialaccounting and managerial accounting?

Which ONE of the following statements is TRUE?

Accounting focuses on quantitative financial information.

The balance sheet reports the excess of a companyâs revenues over its expenses.

Accounting and bookkeeping are the same thing.

Managerial accounting information is provided to external users to aid in decision making.

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)

Accounts payable

Accounts receivable

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)

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)

Purchasing office equipment

Borrowing money from a bank

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)

Retained earnings