Prologue

Question 1

Financial Accounting

Answer 1

• Focus on external users of financial info (owners, creditors, tax authorities and regulators)
• Emphasizes past activities
• Emphasizes objectivity and verifiability
• Emphasizes precision
• Emphasizes company-wide reports
• Must follow GAAP/IFRS
• Mandatory for external reports

Question 2

Managerial Accounting

Answer 2

• Reports to managers internal to the organization (to assist with planning, control and decision making)
• Emphasizes decisions affecting the future
• Emphasizes relevance
• Emphasizes timeliness - no required timing for reports; provide to managers as needed
• Emphasizes segment reports
• Need not follow GAAP/IFRS
• Not mandatory

Question 3

Basic Functions of Managers: Planning

Answer 3

Establishing goals and objectives and identifying ways to achieve the objectives. Ex: Budgets

Question 4

Basic Functions of Managers: Controlling

Answer 4

Monitoring and ensuring the proper implementation of plans. Ex: Performance reports

Question 5

Basic Functions of Managers: Decision Making

Answer 5

Selecting the best course of action among competing alternatives. Ex: Setting prices