FINANCIAL ACCOUNTING 11TH EDITION
TEST BANK FOR FINANCIAL
ACCOUNTING 11TH EDITION ROBERT
LIBBY, PATRICIA LIBBY- COMPLETE
STUDYGUIDE
FINANCIAL ACCOUNTING 11TH EDITION
, FINANCIAL ACCOUNTING 11TH EDITION
TABLE OF CONTENT
FINANCIAL ACCOUNTING 11TH EDITION
, FINANCIAL ACCOUNTING 11TH EDITION
Chapter 1
Financial Statements and Business Decisions
ANSWERS TO QUESTIONS
1. Accounting is a system that collects and processes (analyzes, measures, and records)
financial information about an organization and reports that information to decision
makers.
2. Financial accounting involves preparation of the four basic financial statements and
related disclosures for external decision makers. Managerial accounting involves the
preparation of detailed plans, budgets, forecasts, and performance reports for
internal decision makers.
3. Financial reports are used by both internal and external groups and individuals. The
internal groups are comprised of the various managers of the entity. The external
groups include the owners, investors, creditors, governmental agencies, other
interested parties, and the public at large.
4. Investors purchase all or part of a business and hope to gain by receiving part of
what the company earns and/or selling their ownership interest in the company in
the future at a higher price than they paid. Creditors lend money to a company for a
specific length of time and hope to gain by charging interest on the loan.
, FINANCIAL ACCOUNTING 11TH EDITION
TEST BANK FOR FINANCIAL
ACCOUNTING 11TH EDITION ROBERT
LIBBY, PATRICIA LIBBY- COMPLETE
STUDYGUIDE
FINANCIAL ACCOUNTING 11TH EDITION
, FINANCIAL ACCOUNTING 11TH EDITION
TABLE OF CONTENT
FINANCIAL ACCOUNTING 11TH EDITION
, FINANCIAL ACCOUNTING 11TH EDITION
Chapter 1
Financial Statements and Business Decisions
ANSWERS TO QUESTIONS
1. Accounting is a system that collects and processes (analyzes, measures, and records)
financial information about an organization and reports that information to decision
makers.
2. Financial accounting involves preparation of the four basic financial statements and
related disclosures for external decision makers. Managerial accounting involves the
preparation of detailed plans, budgets, forecasts, and performance reports for
internal decision makers.
3. Financial reports are used by both internal and external groups and individuals. The
internal groups are comprised of the various managers of the entity. The external
groups include the owners, investors, creditors, governmental agencies, other
interested parties, and the public at large.
4. Investors purchase all or part of a business and hope to gain by receiving part of
what the company earns and/or selling their ownership interest in the company in
the future at a higher price than they paid. Creditors lend money to a company for a
specific length of time and hope to gain by charging interest on the loan.
, FINANCIAL ACCOUNTING 11TH EDITION
