ACCT 4b EXAM 1 PREP

• Primary users of financial information include:

  • External investors
  • Creditors
  • Regulatory agencies
  • Customers
• Primary users of managerial information include:

  • Internal managers
  • Supervisors
  • CFO
• Purpose of financial information:

  • Help users make investing and lending decisions
• Purpose of managerial information:

  • Helps managers plan, direct, and control operations
• Primary accounting product for financial information:

  • Income statement
  • Statement of Retained Earnings:
  • Beg. RE + Net income - Dividends = End RE
  • Balance Sheet
  • Statement of Cash Flows
• Primary accounting product for managerial information:

  • Various reports
• What is included and format for financial information:

  • GAAP (General Accepted Accounting Principles)
  • IFRS (International Financial Report Statements)
• What is included and format for managerial information:

  • Whatever management wants
• Underlying basis for financial information:

  • Historical
• Underlying basis for managerial information:

  • Future-oriented
• Information characteristic emphasized for financial information:

  • Reliable and objective
• Information characteristic emphasized for managerial information:

  • Relevant
• Three basic management functions:

  1. Planning - Set goals and create budgets

  2. Directing - Put plan into action

  3. Controlling - Budget vs. actual
• IMA (Statement of Ethical Professional Practice) includes:

  • Maintain professional competence
  • Preserving confidentiality of information
  • Uphold integrity
  • Credibility - Communicate fairly and objectively and disclose all relevant information
• Financial vs Managerial information:

  • Financial information focuses on the company as a whole
  • Managerial information focuses on segments
• Frequency of financial information:

  • Quarterly
  • Annually
• Frequency of managerial information:

  • As needed
• Verification for financial information:

  • Audited by independent CPA
• Verification for managerial information:

  • Some internal audit
• Information required by outside agency for financial information:

  • Yes, SEC
• Information required by outside agency for managerial information:

  • No
• Concern over effect on employee behavior:

  • Financial information has some concern
  • Managerial information requires careful consideration