TOPIC 1 Flashcards
(31 cards)
What is Management Accounting?
The provision of accounting information within the business entity.
What is Financial Accounting?
Financial accounting is used to describe the preparation and presentation of financial reports for external users.
What is the accounting process?
Accounting is the process of identifying, measuring, recording, and communicating economic transactions and events of a business’s operations.
What are the four main areas of accounting?
Commercial Accounting, Public Accounting, Government Accounting, Non-For-Profit Accounting.
What does Commercial Accounting involve?
Commercial accountants work in industry or commerce providing financial and management accounting to external and internal stakeholders.
What is Public Accounting?
Public accountants offer expertise to the general public, including services like auditing and tax preparation.
What does Government Accounting involve?
Government accountants provide financial accounting and auditing services to the government, following similar practices to commercial accounting.
What is Non-For-Profit Accounting?
Non-for-profit accountants focus on fulfilling the organization’s objectives to improve the community, often engaging in management accounting while still preparing financial statements.
What is the objective of General Purpose Accounting?
To provide financial information about the reporting entity that is useful to existing and potential equity investors, lenders, and other creditors in making decisions about providing resources.
What is a Reporting Entity?
A reporting entity is an entity required or choosing to prepare financial statements, which can be a single entity or more.
Who are the primary users of financial information?
Investors, lenders, suppliers, employees, and customers.
What is the role of internal users in accounting?
Internal users, like managers, rely on internal financial reports for decision making.
What activities do external users analyze in financial statements?
Financing, investing, and operating activities.
What are the regulatory requirements for companies in Australia?
Companies registered in Australia must comply with the Corporations Act and prepare financial statements in accordance with Australian Accounting Standards.
What does ASIC do?
The Australian Securities and Investment Commission administers the Corporations Act and ensures compliance with accounting standards for public companies.
What is the role of the Financial Reporting Council?
It oversees accounting standard setting and the Australian Accounting Standards Board (AASB).
What is the Australian Accounting Standards Board?
The AASB issues accounting standards that align with the International Accounting Standards Board, with additional Australian-specific adjustments.
What is the ASX’s role in financial reporting?
The Australian Securities Exchange ensures disclosure of financial information and industry-specific disclosures for public companies.
What do Professional Accounting Bodies do?
They provide qualifications for accountants to prepare financial statements in line with both international and domestic standards.
What is the role of Accounting?
Accounting provides information to help businesses measure performance, project outcomes, and facilitate growth or expansion. It assists in decision making by identifying, measuring, recording, and communicating financial and non-financial information.
What is the difference between Management Accounting and Financial Accounting?
Management Accounting is used for internal decision making and focuses on costing, budgeting, and evaluation. Financial Accounting is used for external reporting, producing standardized financial statements for external users.
Who are the internal users of accounting information?
Internal users include managers, directors, and executives who have access to confidential information to make day-to-day decisions.
Who are the external users of accounting information?
External users include investors, lenders, suppliers, and customers who rely on financial statements to make decisions about providing resources to the business.
What is the objective of General Purpose Financial Reporting?
To provide financial information that is useful for investors, lenders, and creditors in making decisions about providing resources to the reporting entity.
