Acct 210
Midterm

1. List 3 different users (stakeholders) of financial statement information.

Shareholders
Investors
Government Agencies

2. Describe the main difference between Financial Accounting and Managerial Accounting.

 Reports to those outside the organization:
1. Owners
2. Lenders
3. Tax Authorities
4. Regulators
 Emphasize financial consequences of past activities
 Emphasize objectivity and verifiability
 Emphasizes precision
 Emphasize summary data concerning the entire organization
 Must follow GAAP
 Mandatory for external reports
Managerial Accounting:
 Reports to those inside the organization for:
a) Planning
b) Directing and motivating
c) Controlling
d) Performance Evaluation
 Emphasize the decision affecting the future
 Emphasize relevance
 Emphasize the timeliness
 Emphasize detailed segment reports about departments, products, customers and employees.
 Need not follow GAAP
 Not mandatory

3. True or False - Accounting is not important to not-for-profit organizations.
F

4. What does GAAP stand for? What is it?

Generally accepted accounting principles (GAAP) refer to the standard framework of guidelines for financial accounting used in any given jurisdiction; generally known as accounting standards or standard accounting practice. These include the standards, conventions, and rules that accountants follow in recording and summarizing and in the preparation of financial statements.

5. The ___________ ___________ ____________ Board establishes the rules for financial accounting.
Financial Accounting Standard Board

6. What is the accounting equation?
Accounting equation is the basic accounting foundation to show that debits are equal to credits.
Assets = Liabilities + Owner’s equity

7. There are 4 main financial statements. Name and describe 1 briefly.

Income