Financial Accounting
Chapter 1
BE1-1 Briefly define accounting. What are the three main characteristics of accounting? Is accounting static or dynamic?
Accounting collects, analyzes, measures and records financial information about an organization and reports that information to stakeholders and decision makers. Accounting has 3 essential characteristics. Accounting is the (1) identification, measurement, and communication of financial information about economic entities to interested persons. Like social sciences, accounting is largely a product of its environment. Overtime, economic entities have become ever increasing in size and complexity. As a result, accounting objectives and practices are not the same today as they were in the past. Accounting theory and practice have always evolved and will continue to evolve.
BE1-2 .Explain generally how financial accounting and managerial accounting are different from each other?
Financial accounting measures, classifies, and summarizes in report form those activities and that information which relate to the enterprise as a whole for use by parties both internal and external to a business enterprise. The principal focus can be seen to be external to the enterprise. Managerial accounting also measures, classifies, and summarizes in report form enterprise activities, but the communication is for the use of internal, managerial parties, and relates more to subsystems of the entity. Managerial accounting is management decision oriented and directed more toward product line, division, and profit centre.
BE1-3 How does accounting help the capital allocation process?
Accounting has the responsibility of measuring company performance accurately and fairly on a timely basis. This enables investors and creditors to assess the relative risks and returns of investment opportunities and channel resources more effectively. If a company’s financial performance is measured accurately, fairly, and on a timely basis, the
BE1-1 Briefly define accounting. What are the three main characteristics of accounting? Is accounting static or dynamic?
Accounting collects, analyzes, measures and records financial information about an organization and reports that information to stakeholders and decision makers. Accounting has 3 essential characteristics. Accounting is the (1) identification, measurement, and communication of financial information about economic entities to interested persons. Like social sciences, accounting is largely a product of its environment. Overtime, economic entities have become ever increasing in size and complexity. As a result, accounting objectives and practices are not the same today as they were in the past. Accounting theory and practice have always evolved and will continue to evolve.
BE1-2 .Explain generally how financial accounting and managerial accounting are different from each other?
Financial accounting measures, classifies, and summarizes in report form those activities and that information which relate to the enterprise as a whole for use by parties both internal and external to a business enterprise. The principal focus can be seen to be external to the enterprise. Managerial accounting also measures, classifies, and summarizes in report form enterprise activities, but the communication is for the use of internal, managerial parties, and relates more to subsystems of the entity. Managerial accounting is management decision oriented and directed more toward product line, division, and profit centre.
BE1-3 How does accounting help the capital allocation process?
Accounting has the responsibility of measuring company performance accurately and fairly on a timely basis. This enables investors and creditors to assess the relative risks and returns of investment opportunities and channel resources more effectively. If a company’s financial performance is measured accurately, fairly, and on a timely basis, the