Ch 1 solutions - MANAGEMENT ACCOUNTING MODULE - CHAPTER 10...

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Chapter 1 - An Introduction to Accounting Answers to questions 1. Accountants working in public accounting provide fee based  services to a variety of clients.  Common services offered include  audit services, tax services and consulting services. Accountants working in private accounting usually work for a  specific company or agency.  Private accountants provide a variety  of services to their employer including preparing financial  statements, developing budgets, preparing payroll, paying suppliers,  measuring cost and assisting with decision making. 2. Stakeholders  are the parties that use accounting information.  They  include resource providers, financial analysts, brokers, attorneys,  government regulators, and news reporters. 3. Investors expect a distribution of the business’s income  as a return  on their financial investment. Creditors lend financial resources to businesses and receive interest   as a return or profit on the loan.  4. Financial accounting  provides information that is useful to external  resource providers.  Managerial accounting  provides information that is useful to  managers in operating an organization (i.e., internal users).  5. The U.S. rules of accounting measurement are called generally  accepted accounting principles (GAAP).  1-1
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6. There is an effort to bring the accounting standards of the major  industrialized nations into uniformity, a process referred to an  harmonization.  Currently there is no global GAAP.   7. The Financial Accounting Standards Board (FASB) has the primary  responsibility for establishing GAAP in the U.S.  FASB is a non- governmental rule-making body established by the accounting  profession.  8. Items reported on the financial statements are organized into classes  or categories called elements.  The ten elements of financial  statements are:  1. Assets 2. Liabilities 3. Equity (Stockholders’ Equity) 4. Common Stock (Contributed Capital) 5. Revenue 6. Expenses 7. Distributions (Dividends) 8. Net Income 9. Gains 10. Losses Accounts are specific items or subclassifications of the elements.  Examples of accounts include cash, land and common stock. 9.
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This note was uploaded on 02/25/2011 for the course ACCT 6305 taught by Professor Anderson during the Spring '11 term at University of Texas at Dallas, Richardson.

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Ch 1 solutions - MANAGEMENT ACCOUNTING MODULE - CHAPTER 10...

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