WGU D196 PRINCIPLES OF FINANCIAL AND
MANAGERIAL ACCOUNTING | 2026 KEY
CONCEPTS FOR FINANCIAL AND MANAGERIAL
ACCOUNTING ~WESTERN GOVERNORS
UNIVERSITY.
Passing D196 Financial and Managerial Accounting
Important Concepts to Understand
• Financial Accounting: The gathering, reporting, and analysis of information primarily
for the benefit of external users like investors and creditors.
• Managerial Accounting: The gathering and analysis of information for the
purpose of internal decision making.
• Assets: Resources owned by a business
o Cash, accounts receivable, notes receivable, prepaid expenses etc.
• Liabilities: Claims or obligations of the business against the assets of the business
o Accounts payable, notes payable, etc.
• Equity: Ownership interest in a company.
o Retained earnings.
The balance sheet (or statement of financial position) reports the resources of a
company (assets), the company’s obligations (liabilities), and the difference
between what is owned (assets) and what is owed (liabilities), called owners’
equity.
The income statement (or statement of earnings) reports the amount of net income
earned by a company during a period, with annual and quarterly income
statements being the most common. (Net income is discussed later on.) The income
, statement represents the accountant’s best effort at measuring the economic
performance of a company.
The statement of cash flows reports the amount of cash collected and paid out by
a company in operating, investing, and financing activities. The statement of cash
flows is for the same period of time as the income statement, again with annual
and quarterly statements of cash flows being the most common. The statement of
cash flows represents the accountant’s best efforts at showing the change in cash
during a period of time.
MANAGERIAL ACCOUNTING | 2026 KEY
CONCEPTS FOR FINANCIAL AND MANAGERIAL
ACCOUNTING ~WESTERN GOVERNORS
UNIVERSITY.
Passing D196 Financial and Managerial Accounting
Important Concepts to Understand
• Financial Accounting: The gathering, reporting, and analysis of information primarily
for the benefit of external users like investors and creditors.
• Managerial Accounting: The gathering and analysis of information for the
purpose of internal decision making.
• Assets: Resources owned by a business
o Cash, accounts receivable, notes receivable, prepaid expenses etc.
• Liabilities: Claims or obligations of the business against the assets of the business
o Accounts payable, notes payable, etc.
• Equity: Ownership interest in a company.
o Retained earnings.
The balance sheet (or statement of financial position) reports the resources of a
company (assets), the company’s obligations (liabilities), and the difference
between what is owned (assets) and what is owed (liabilities), called owners’
equity.
The income statement (or statement of earnings) reports the amount of net income
earned by a company during a period, with annual and quarterly income
statements being the most common. (Net income is discussed later on.) The income
, statement represents the accountant’s best effort at measuring the economic
performance of a company.
The statement of cash flows reports the amount of cash collected and paid out by
a company in operating, investing, and financing activities. The statement of cash
flows is for the same period of time as the income statement, again with annual
and quarterly statements of cash flows being the most common. The statement of
cash flows represents the accountant’s best efforts at showing the change in cash
during a period of time.
