ACCT1501 Chapter Notes - Chapter 1: Australian Taxation Office, Cash Flow Statement, Financial Statement

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24 May 2018

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Introduction to Financial Accounting

Accounting: Identifying, measuring, recording and communicating economic info to assist users to

make decisions

- Financial Accounting System: Periodic financial statements and related disclosures.

External decision makers such as investors, creditors, suppliers, customers.

Reporting standard: AASB standards

: focuses on the provision of info to users external to the enterprise.

- Managerial Accounting System: Detailed plans and continuous performance reports.

Internal decision makers such as managers throughout the organisation.

: information to users within the enterprise (to aid in operational planning and

control decisions).

Users of accounting information:

- Bankers: The likelihood of company meeting its interest principal payment on time

- ASIC: Financial position and performance of a company issuing shares to the public for the

first time

- Suppliers: Probability that the company will be able to pay for its purchases on time

- Australian Tax Office: Profitability of company based on tax law

- Trade Unions: Profitability of company since last contract with employees was signed

Annual report: Descriptive information about the company and the general purpose financial

statements

Balance sheet: (A=L+OE)

- Financial position of an enterprise at a particular point in time (financial resources and

obligations)

Income statement: (R-E)

- Financial performance of an enterprise over a period of time (generating new resources

from operations)

- Revenue: inflows of economic benefits that increase owe’s euit

- Epeses: use o loss of eooi eefits that deease owe’s euit

- Revenues & Expenses are recognised when an economically meaningful event has occurred

(Accrual Accounting)

Cash flow statement:

- Cash inflows and outflows over a period of time

Accrual Accounting: includes the impact of transactions on the financial statements in the time

periods where revenues and expenses occur rather than when the cash is received or paid

Cash Accounting: Only accounts for revenues and expenses when cash is paid or received

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Document Summary

Accounting: identifying, measuring, recording and communicating economic info to assist users to make decisions. Financial accounting system: periodic financial statements and related disclosures. External decision makers such as investors, creditors, suppliers, customers. : focuses on the provision of info to users external to the enterprise. Managerial accounting system: detailed plans and continuous performance reports. Internal decision makers such as managers throughout the organisation. : information to users within the enterprise (to aid in operational planning and control decisions). Bankers: the likelihood of company meeting its interest principal payment on time. Asic: financial position and performance of a company issuing shares to the public for the first time. Suppliers: probability that the company will be able to pay for its purchases on time. Australian tax office: profitability of company based on tax law. Trade unions: profitability of company since last contract with employees was signed. Annual report: descriptive information about the company and the general purpose financial statements.

Related Questions

QUESTION 1 The knowledge of financial accounting can assist people with decisions such as whether to extend credit to a business. True False 0.2 points Saved QUESTION 2 Employees of a company would not have a reason to use the information provided by financial accounting. True False 0.2 points Saved

QUESTION 3 Financial accounting should be used for assessing the financial health of large organizations only. True False 0.2 points Saved

QUESTION 4 Financial accounting can be helpful for a job candidate who is assessing the financial future of a potential employer. True False 0.2 points Saved QUESTION 5 Lenders might use the information produced by financial accounting when making loan decisions. True False 0.2 points Saved

QUESTION 6 Credit analysts prefer not to use information provided by financial accounting, as it is not accurate. True False 0.2 points Saved

QUESTION 7 Financial accounting is helpful to investment advisors. True False 0.2 points Saved

QUESTION 8 Financial accounting is more useful than managerial accounting. True False 0.2 points Saved

QUESTION 9 The decision to buy or rent equipment is an example of a decision aided by managerial accounting. True False 0.2 points Saved

QUESTION 10 Which of the following statements is true of financial accounting? A. It is used by external parties to make investment decisions. B. It is used to make lease or purchase decisions. C. Managerial accounting is another name for financial accounting, D. It is primarily used to make internal decisions of a business. E. The effectiveness of advertising can be judged using financial accounting. 0.2 points Saved QUESTION 11 The charge for using money over time, often associated with long-term loans, is known as: A. interest. B. principal. C. distribution charge. D. cash dividend. E. preferred dividend. 0.2 points Saved QUESTION 12 Which of the following is a common feature of financial and managerial accounting? A. Both have same objectives B. Both are prepared according to U.S. GAAP C. Both are reported at year end in the annual report D. Both are analyzed by external users while making investment decisions E. Both are used by the management in making decisions 0.2 points Saved

QUESTION 13 Dividends are required to be paid to stockholders on an annual basis. True False 0.2 points Saved

QUESTION 14 An individual who owns one or more shares of stock in a corporation is an owner of that corporation. True False 0.2 points Saved

QUESTION 15 Corporations do not exist as separate legal entities apart from their owners. True False 0.2 points Save Answer

QUESTION 16 It is very difficult to buy or sell ownership shares of a corporation in a stock exchange. True False 0.2 points Saved

QUESTION 17 Stock markets match up investors who wish to buy shares with those who wish to sell them. True False 0.2 points Saved

QUESTION 18 Legal process by which owners of an organization apply to a state government to have it identified as an entity legally separate from its owners is called: A. stocking. B. filling. C. attributing. D. registration. E. incorporation. 0.2 points Saved

QUESTION 19 An advantage of ownership in a sole proprietorship over ownership in a corporation is: A. tax benefits. B. having a board of directors. C. the ability to raise capital through issuance of stock. D. separation of owner and business as legal entities. E. limited liability for debts. 0.2 points Saved

QUESTION 20 Who hires the management of a corporation? A. Stockholders B. Board of directors C. Creditors D. Government E. SEC 0.2 points Saved QUESTION 21 Inventory refers to the: A. excess amount paid for an asset over its fair value. B. intangible assets of a business. C. merchandise bought or manufactured for the purpose of selling. D. amount of net income reinvested by company for future operations. E. revenue generated from investment. 0.2 points Saved QUESTION 22 Investors use financial information to predict whether a: A. company will recruit more employees. B. company's stock price will increase C. company has invested in buildings. D. company will pay salaries. E. company's bond price will increase. 0.2 points Saved

QUESTION 23 Financial accounting can be compared to a portrait. True False 0.2 points Saved

QUESTION 24 Financial statements provide the form and structure for the conveyance of financial information that will create a likeness of the reporting organization. True False 0.2 points Saved

QUESTION 25 The information reported in financial statements must be exact for an investor to make any decision. True False 0.2 points Saved

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ACCT1501 Chapter Notes - Chapter 1: Australian Taxation Office, Cash Flow Statement, Financial Statement

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