1.1 Understanding the purpose of accounting

    Cards (29)

    • Audit and assurance ensures the credibility of financial information.
      True
    • The function of audit and assurance involves reviewing financial records for compliance
    • What are the primary functions of an accountant in business?
      Financial reporting, management accounting, audit and assurance, tax planning
    • Financial reporting provides external stakeholders with reliable financial information.

      True
    • The purpose of financial accounting is to prepare financial statements that give a true and fair view of a company's financial position
    • An income statement reports a company's revenues, expenses, and net profit or loss over a period of time.

      True
    • What does a balance sheet provide a snapshot of?
      Assets, liabilities, and equity
    • A cash flow statement categorizes cash flows into operating, investing, and financing activities.
      True
    • The purpose of financial accounting is to prepare financial statements that give a true and fair view
    • Match the accounting function with its primary responsibility:
      Financial Reporting ↔️ Preparing financial statements
      Management Accounting ↔️ Creating internal reports
      Audit and Assurance ↔️ Reviewing financial records
      Tax Planning ↔️ Managing tax obligations
    • Management accounting creates internal reports for budgeting, performance analysis, and cost control
    • What is one key function of accounting related to budgeting and cost control?
      Management accounting
    • Match the stakeholder with their purpose of using accounting information:
      Investors ↔️ Investment decisions
      Creditors ↔️ Evaluate loan risk
      Management ↔️ Strategic planning
      Government Agencies ↔️ Ensure compliance
    • Performance analysis in management accounting helps identify areas for improvement.
      True
    • What is the role of an accountant in business?
      Preparing and analyzing financial statements
    • Preparing balance sheets, income statements, and cash flow statements is part of the function of financial
    • What is the significance of financial reporting in accounting?
      Provides reliable information for stakeholders
    • Management accounting creates internal reports for budgeting and cost control.
      True
    • Creating internal reports for budgeting and cost control is part of the function of management
    • Who are the key stakeholders who use accounting information?
      Investors, creditors, management, employees
    • What does a balance sheet provide information about?
      Assets, liabilities, and equity
    • What does a cash flow statement categorize cash flows into?
      Operating, investing, and financing
    • The income statement reports a company's revenues, expenses, and net profit or loss
    • What is the main purpose of financial statements for external stakeholders?
      Informed decision-making
    • A balance sheet shows a company's financial position at a specific point in time.

      True
    • What does tax planning aim to reduce for a business?
      Tax liabilities
    • Audit and assurance ensure the credibility of financial information.

      True
    • Investors use accounting information to assess a company's financial performance
    • What is one key responsibility of management accounting?
      Budgeting