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Foundations of Accounting - Chapter 1
Accounting in Business Questions and
Correct Answers/ Latest Update / Already
Graded
accounting
Ans: information and measurement system identifying,
recording, and communicating organization's business
activities. Language of business, communicates data that helps
people make better decisions.
Accounting functions
Ans: identifying (select transactions and events), recording
(input, measure, and log), communicating (prepare, analyze,
and interpret).
Common contact with accouting
Ans: credit checks, checking accounts, tax forms, payroll
Financial accounting
Ans: focuses on needs of external users
All rights reserved © 2025/ 2026 |
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Managerial accounting
Ans: focus on needs of internal users
External users
Ans: don't directly run organization and have limited access to
its accounting information. Get accounting information from
general purpose financial statements.
Lenders (creditors)
Ans: External user. Loan money or other resources to an
organization. Banks, savings and loans, co -ops, and mortgage
and finance companies are lenders. Lenders use information to
assess whether an organization will repay its loans with
interest.
Shareholders (investors)
Ans: External user. Owners of a corporation. Use accounting
reports to decide to buy, hold, or sell stock.
Boards of directors
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Ans: External user. Oversee organization. Directors use
accounting information to evaluate performance of executive
management.
External (independent) auditors
Ans: External user. Examine financial statements to verify th at
they are prepared according to generally accepted accounting
principles
Nonmanagerial and non-executive employees and labor unions
Ans: External user. Use external information to bargain for
better wages.
Regulators
Ans: External user. Legal authority over certain activities of
organizations. Example: IRS requires accounting reports for
computing taxes.
Voters and government officials
Ans: External user. Use information to evaluate government
performance.
All rights reserved © 2025/ 2026 |
Foundations of Accounting - Chapter 1
Accounting in Business Questions and
Correct Answers/ Latest Update / Already
Graded
accounting
Ans: information and measurement system identifying,
recording, and communicating organization's business
activities. Language of business, communicates data that helps
people make better decisions.
Accounting functions
Ans: identifying (select transactions and events), recording
(input, measure, and log), communicating (prepare, analyze,
and interpret).
Common contact with accouting
Ans: credit checks, checking accounts, tax forms, payroll
Financial accounting
Ans: focuses on needs of external users
All rights reserved © 2025/ 2026 |
, Page |2
Managerial accounting
Ans: focus on needs of internal users
External users
Ans: don't directly run organization and have limited access to
its accounting information. Get accounting information from
general purpose financial statements.
Lenders (creditors)
Ans: External user. Loan money or other resources to an
organization. Banks, savings and loans, co -ops, and mortgage
and finance companies are lenders. Lenders use information to
assess whether an organization will repay its loans with
interest.
Shareholders (investors)
Ans: External user. Owners of a corporation. Use accounting
reports to decide to buy, hold, or sell stock.
Boards of directors
All rights reserved © 2025/ 2026 |
, Page |3
Ans: External user. Oversee organization. Directors use
accounting information to evaluate performance of executive
management.
External (independent) auditors
Ans: External user. Examine financial statements to verify th at
they are prepared according to generally accepted accounting
principles
Nonmanagerial and non-executive employees and labor unions
Ans: External user. Use external information to bargain for
better wages.
Regulators
Ans: External user. Legal authority over certain activities of
organizations. Example: IRS requires accounting reports for
computing taxes.
Voters and government officials
Ans: External user. Use information to evaluate government
performance.
All rights reserved © 2025/ 2026 |
