Question 1

What are the differences between managerial accounting and financial accounting? From a career standpoint, which type do you prefer and why?

Accepted Answer

Managerial accounting and financial accounting are two distinct branches of accounting that serve different purposes within an organization.

Managerial accounting focuses on providing internal stakeholders, such as managers and executives, with the financial information they need to make informed business decisions. This includes budgeting, cost analysis, performance evaluation, and forecasting. The primary goal of managerial accounting is to help management optimize business operations and improve overall performance.

On the other hand, financial accounting is concerned with providing external stakeholders, such as investors, creditors, and regulatory agencies, with accurate and reliable financial information about the company's performance. This includes preparing financial statements, such as the balance sheet, income statement, and cash flow statement, in accordance with generally accepted accounting principles (GAAP).

From a career standpoint, the preference for managerial accounting or financial accounting depends on individual interests and career goals.

Those who prefer managerial accounting may enjoy the opportunity to work closely with management to help drive strategic decision-making and improve operational efficiency. This role often involves analyzing data, identifying trends, and providing insights that can directly impact the organization's success.

On the other hand, individuals who prefer financial accounting may be drawn to the regulatory and compliance aspects of the role, as well as the opportunity to communicate financial information to external stakeholders. This role often involves ensuring that financial statements are accurate and in compliance with GAAP, as well as providing transparency and accountability to investors and creditors.

Ultimately, the preference for managerial accounting or financial accounting depends on an individual's strengths, interests, and career aspirations. Some may find fulfillment in the strategic and analytical nature of managerial accounting, while others may be drawn to the regulatory and reporting responsibilities of financial accounting. Both paths offer rewarding career opportunities and the chance to make a meaningful impact within an organization.

Question 2

Describe the first step, collecting data, of developing a management information system. Define internal and external data sources with several examples of each.

Accepted Answer

The first step in developing a management information system (MIS) is collecting data. This involves gathering relevant information from both internal and external sources to be used for analysis and decision-making.

Internal data sources refer to the data that is generated within the organization. This can include:

1. Sales and financial records: Information on sales transactions, revenue, expenses, and other financial data collected from the organization's accounting system.
2. Employee records: Data on employee demographics, performance evaluations, attendance, and other HR-related information.
3. Production and operations data: Information on production output, inventory levels, and other operational metrics collected from the organization's production systems.

External data sources, on the other hand, refer to data that is obtained from outside the organization. This can include:

1. Market research reports: Data on industry trends, customer preferences, and competitive analysis obtained from market research firms.
2. Government data: Information on economic indicators, demographic trends, and regulatory changes obtained from government agencies.
3. Social media and web analytics: Data on customer sentiment, website traffic, and online engagement collected from social media platforms and web analytics tools.

By collecting and integrating data from these internal and external sources, organizations can build a comprehensive and reliable foundation for their management information system. This data can then be processed, analyzed, and transformed into meaningful insights to support strategic decision-making and improve organizational performance.

Question 3

Define a balance sheet (also called a statement of financial position). What does it balance?

Accepted Answer

A balance sheet, also known as a statement of financial position, is a financial statement that provides a snapshot of a company's financial position at a specific point in time. It presents the company's assets, liabilities, and shareholders' equity, and it balances the equation Assets = Liabilities + Shareholders' Equity. This means that the total assets of a company must equal the total of its liabilities and shareholders' equity. The balance sheet is an important tool for investors, creditors, and analysts to assess the financial health and stability of a company. It provides a clear picture of what a company owns (assets), what it owes (liabilities), and the amount of investment by shareholders (equity).

Question 4

Explain why a firm's financial statements should be audited.

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Question 5

Write the accounting equation. Then define each term and give an example.

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Question 6

Today corporations are required to send their stockholders an annual report. Assume that you are a prospective investor trying to decide if you should invest in a specific corporation. What type of information is contained in an annual report that would help you decide if this is the right investment for you?

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Question 7

What types of accounts might be listed on a firm's income statement? What would be the term for the dollar amount left at the bottom of the income statement?

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Question 8

Would you expect the information needs of top managers to differ from those of middle- and lower-level managers? Explain your answer.

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Question 9

What type of information is reported on a corporation's statement of cash flows?

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Question 10

Managers and other groups interested in a firm's financial records must be able to "trust the numbers." Unfortunately, a large number of accounting scandals have caused people to doubt the numbers. Why do you think corporate executives "cook" their company's books?

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Question 11

Describe each of the five functions of a management information system.

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Question 12

Describe the employment trends for accountants, auditors, and managers in the accounting profession between now and the year 2020. Then describe what skills employees must have in order to be successful in the accounting profession.

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Question 13

In your own words, describe the relationship between information and risk and how this relationship could impact the business decision-making process.

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Question 14

Compare information and data. Why might a manager prefer information to data?

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Question 15

Briefly describe each of the four parts of a typical business report.

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Question 16

Describe the three activities of a statement of cash flows. Where does each section fall on the statement and what does it account for?

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Question 17

How might the information needs of a marketing manager differ from those of an operations manager?

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Question 18

Why are current assets listed before fixed assets on the balance sheet?

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Question 19

In what ways does the Sarbanes-Oxley Act improve the validity of the information provided by a firm's accounting system?

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Question 20

How would it be easier to determine if a firm made or lost money last year―by looking at the balance sheet or by looking at the income statement? Support your answer by explaining in general terms what accounts a balance sheet lists and what accounts an income statement lists.

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Quiz 17: Using Management and Accounting Information