WGU D196 PRINCIPLES OF FINANCIAL AND
MANAGERIAL ACCOUNTING | 2026 STUDY
GUIDE COMPREHENSIVE NOTES AND EXAM PREP
~ WESTERN GOVERNORS UNIVERSITY.
D196 – Principles of Financial and Managerial Accounting:
Study Guide
Course Overview
This course will provide you with a foundational understanding of how accounting impacts you as a
business professional. From budgets and performance reports to cost analyses and approaches to
decision making, Accounting impacts them all. Principles of Accounting will introduce you to how things
are done in the business environment today. As the “language of business,” this course will give you an
insider’s view of both financial and managerial accounting, both of which will be essential to your
success in whatever path you take in the global economy of today and the future.
UNIT 2: (Competency Weight 15%)
Accounting Information (Module 1 – Approximately 5% of OA) – Complete the following activities:
€ Read/Listen to all the module content. Watch all the embedded videos.
€ Complete all the Knowledge Checks.
€ Complete the Module 1 quiz.
You should be able to answer the following questions after studying this module:
• What is the role and purpose of Accounting?
o “Language of Business”
o Accumulate, measure and communicate financial information
o Used in the decision-making process
o Analyze, Bookkeep, and Evaluate
• Who uses accounting information and why?
o Management uses both types of accounting
o Managerial Accounting = Internal
▪ Key Users: management, suppliers and customers, and employees
▪ Used for:
• Product Cost
• Break Even Analysis
• Budgeting
• Performance Evaluation
o Financial Accounting = External
▪ Key Users: Lenders & Investors (others: Government Agencies & Competitors)
▪ Used For:
• Credit Analysis
• Regulatory Uses (Government keeps track of Banks and Insurance
Companies)
, • Estimate Value of Company
▪ 3 primary financial statements:
• Balance Sheet: Reports the resources of a company (the assets), the
company’s obligations (the liabilities), and the owners’ equity, which
represents the difference between what is owned (assets) and what is
owed (liabilities).
1
, • Income Statement: Reports the amount of net income earned by a
company during a period.
• Statement of Cash Flows: Reports the amount of cash collected and
paid out by a company in the following three types of activities:
operating, investing, and financing.
• What are the important influences on Accounting?
o In the US, accounting standards for publicly listed companies are set by the Financial
Accounting Standards Board (FASB)
▪ The organization responsible for studying accounting issues and establishing
accounting standards to govern financial reporting in the United States.
▪ Not a government agency but a private body
• Has no legal power to enforce the standards they set
• Made up of 7 experts in the field of accounting and business
▪ Public Process – seeks consensus by requesting written comments and
sponsoring public hearings on all its proposed standards
▪ End Result of public procees is GAAP (Generally Accepted Accounting Principles)
- set of accounting rules
o Governmental Accounting Standards Board (GASB)
▪ sets the accounting and financial reporting standards for state and local
governments following GAAP
▪ Also a private body like FASB
o Other Organizations:
▪ SEC (Securities and Exchange Commission)
• US Federal Governemnt Agency
• has the legal authority to set the accounting rules in the US
▪ AICPA (American Institute of Certified Public Accountants)
• the professional association of Certified Public Accountants (CPAs) in
the US
▪ IRS (Internal Revenue Service)
• US government agency that collects and regulates income taxes
• DOES NOT set financial accounting rules
• DOES sets income tax rules
▪ IASB (International Accounting Standards Board)
• the FASB for the whole world
• Follows a very similar process to the FASB
• Based in London
• What is the role of ethics in accounting?
o Ethics are the basic moral principles that govern an individual’s behavior, including how
an individual conducts him or herself in a business-related activity.
o Accountants need to remain ethical because they are the scorekeeper and can’t be
biased.
o Ethics is enforced by:
▪ SEC with legal punishments
▪ AICPA with professional sanctions (losing CPA license)
▪ Business Community with losing credibility (cannot find another job without
credibility)
2
MANAGERIAL ACCOUNTING | 2026 STUDY
GUIDE COMPREHENSIVE NOTES AND EXAM PREP
~ WESTERN GOVERNORS UNIVERSITY.
D196 – Principles of Financial and Managerial Accounting:
Study Guide
Course Overview
This course will provide you with a foundational understanding of how accounting impacts you as a
business professional. From budgets and performance reports to cost analyses and approaches to
decision making, Accounting impacts them all. Principles of Accounting will introduce you to how things
are done in the business environment today. As the “language of business,” this course will give you an
insider’s view of both financial and managerial accounting, both of which will be essential to your
success in whatever path you take in the global economy of today and the future.
UNIT 2: (Competency Weight 15%)
Accounting Information (Module 1 – Approximately 5% of OA) – Complete the following activities:
€ Read/Listen to all the module content. Watch all the embedded videos.
€ Complete all the Knowledge Checks.
€ Complete the Module 1 quiz.
You should be able to answer the following questions after studying this module:
• What is the role and purpose of Accounting?
o “Language of Business”
o Accumulate, measure and communicate financial information
o Used in the decision-making process
o Analyze, Bookkeep, and Evaluate
• Who uses accounting information and why?
o Management uses both types of accounting
o Managerial Accounting = Internal
▪ Key Users: management, suppliers and customers, and employees
▪ Used for:
• Product Cost
• Break Even Analysis
• Budgeting
• Performance Evaluation
o Financial Accounting = External
▪ Key Users: Lenders & Investors (others: Government Agencies & Competitors)
▪ Used For:
• Credit Analysis
• Regulatory Uses (Government keeps track of Banks and Insurance
Companies)
, • Estimate Value of Company
▪ 3 primary financial statements:
• Balance Sheet: Reports the resources of a company (the assets), the
company’s obligations (the liabilities), and the owners’ equity, which
represents the difference between what is owned (assets) and what is
owed (liabilities).
1
, • Income Statement: Reports the amount of net income earned by a
company during a period.
• Statement of Cash Flows: Reports the amount of cash collected and
paid out by a company in the following three types of activities:
operating, investing, and financing.
• What are the important influences on Accounting?
o In the US, accounting standards for publicly listed companies are set by the Financial
Accounting Standards Board (FASB)
▪ The organization responsible for studying accounting issues and establishing
accounting standards to govern financial reporting in the United States.
▪ Not a government agency but a private body
• Has no legal power to enforce the standards they set
• Made up of 7 experts in the field of accounting and business
▪ Public Process – seeks consensus by requesting written comments and
sponsoring public hearings on all its proposed standards
▪ End Result of public procees is GAAP (Generally Accepted Accounting Principles)
- set of accounting rules
o Governmental Accounting Standards Board (GASB)
▪ sets the accounting and financial reporting standards for state and local
governments following GAAP
▪ Also a private body like FASB
o Other Organizations:
▪ SEC (Securities and Exchange Commission)
• US Federal Governemnt Agency
• has the legal authority to set the accounting rules in the US
▪ AICPA (American Institute of Certified Public Accountants)
• the professional association of Certified Public Accountants (CPAs) in
the US
▪ IRS (Internal Revenue Service)
• US government agency that collects and regulates income taxes
• DOES NOT set financial accounting rules
• DOES sets income tax rules
▪ IASB (International Accounting Standards Board)
• the FASB for the whole world
• Follows a very similar process to the FASB
• Based in London
• What is the role of ethics in accounting?
o Ethics are the basic moral principles that govern an individual’s behavior, including how
an individual conducts him or herself in a business-related activity.
o Accountants need to remain ethical because they are the scorekeeper and can’t be
biased.
o Ethics is enforced by:
▪ SEC with legal punishments
▪ AICPA with professional sanctions (losing CPA license)
▪ Business Community with losing credibility (cannot find another job without
credibility)
2
