AFM101 Chapter Notes - Chapter 1: Financial Statement Analysis, Cash Cash, Retained Earnings

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scarletpanda765

25 Aug 2016

School

University of Waterloo

Department

Accounting & Financial Management

Course

AFM101

Professor

Duane Kennedy

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AFM101 Full Course Notes

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Creditors (lenders): lend money for a specific period of time, and gain by charging interest. Investors (owners): shareholders/stakeholders buy % of large corporations, hoping to receive a portion of company"s dividends, and to eventually sell their share for a higher price than they paid. To understand any company"s financial statements, you must understand its operations. Financing activities: exchanging money with lenders and owners. Accounting: a system that collects and processes (analyzes, measures, records) financial information about an organization and reports that information to decision makers. Managerial accounting: detailed plans & continuous performance reports. Internal decision makers: managers typically must plan daily operations of the organization. Financial accounting: periodic (quarterly/annual) financial statements & related disclosures. External decision makers: parties outside firm; creditors, investors, suppliers, customers. Accounting records: an organized format used to accumulate the dollar effects of transactions. *what do accountants do? (cars): collection of data from day to day operations, analysis of transactions, recording transactions, summarizing into financial statements.

Related Questions

I need a discussion response to the following peers discussion post

When it comes to Managerial Accounting, a more in depth tone is taken when information is passed down to different leaders in the company. Having only financial statements is not the end-all-be-all of how a company is ran. The three tasks that managerial accounting helps with are: 1. Cost of an organizationâs products and services 2. Potential activities 3. Comparing of actual results to the planned ones (PowerPoint, Ch. 1 p. 4). How I see ethical issues arising is if certain decision makers are not honest. Making decisions and running an organization with both aspects is a must in order to achieve the success needed. Dishonesty would eventually show in the financial aspect of the business, so specific reporting requirements for managerial accounting would not be needed.

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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

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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AFM101 Chapter Notes - Chapter 1: Financial Statement Analysis, Cash Cash, Retained Earnings

AFM101 Full Course Notes

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