MBA 700 Exam 1 Questions And
Correct Answers
What is financial accounting?
Financial accounting encompasses the rules and procedures to convey financial
information about an organization. It is the communication of information about a
business or other type of organization so that individuals can assess its financial health
and prospects.
How does financial accounting differ from managerial accounting?
Financial accounting deals with external decisions, whereas managerial accounting deals
with internal decisions.
List the potential uses of the information provided by financial accounting
Assessing employment potential, lending money, granting credit, and buying or selling
ownership shares.
What is a corporation?
A corporation is an organization that has been formally recognized by the government
as a legal entity.
, How does a business become a corporation?
Through incorporation - owners apply to the state government to have it identified as
an entity legally separate from its owners
What is the board of directors of a corporation?
the governing body of a corporation, elected by the shareholders to establish corporate
policy, appoint executive officers, and make major business and financial decisions
Why do individuals or entities choose to invest in the capital stock of corporation?
Shares of stock can be issues that give the holder an ownership right.
How does an investor differ from a creditor?
Investors buy and sell the capital stock, whereas creditors choose to loan money to the
same orgs.
What is financial information?
Information expressed in monetary terms
Why is it acceptable for financial accounting to be imprecise?
Because such accuracy is often impossible to achieve and not really required by decision
makers.
Correct Answers
What is financial accounting?
Financial accounting encompasses the rules and procedures to convey financial
information about an organization. It is the communication of information about a
business or other type of organization so that individuals can assess its financial health
and prospects.
How does financial accounting differ from managerial accounting?
Financial accounting deals with external decisions, whereas managerial accounting deals
with internal decisions.
List the potential uses of the information provided by financial accounting
Assessing employment potential, lending money, granting credit, and buying or selling
ownership shares.
What is a corporation?
A corporation is an organization that has been formally recognized by the government
as a legal entity.
, How does a business become a corporation?
Through incorporation - owners apply to the state government to have it identified as
an entity legally separate from its owners
What is the board of directors of a corporation?
the governing body of a corporation, elected by the shareholders to establish corporate
policy, appoint executive officers, and make major business and financial decisions
Why do individuals or entities choose to invest in the capital stock of corporation?
Shares of stock can be issues that give the holder an ownership right.
How does an investor differ from a creditor?
Investors buy and sell the capital stock, whereas creditors choose to loan money to the
same orgs.
What is financial information?
Information expressed in monetary terms
Why is it acceptable for financial accounting to be imprecise?
Because such accuracy is often impossible to achieve and not really required by decision
makers.
