Accounting and Finance Tes

What are Internal Users and who are they

Internal users are people within a company/business

Users: Managers, owners, employees

What are External Users and who are they

External users are people outside a company/business

Users: Suppliers, bank, customers, investors, potential investors, and tax authorities (IRS)

GAAP: Generally Accepted Accounting Principles

• Consistency and standardization: ensures a consistent way to track and present financial information

• Investor confidence: ensures compliance for audits

• Transparency: recognizes fraud

Accountant vs. Financial Managers

Accountant: Track transactions and creating financial reports

Financial Managers: The person in charge of a business’s financial planning & funding

Audit & Fraud meanings

Audit: IRS is checking your books/records to make sure all your information adds up and there is no fraud involved

Fraud: Intentionally misrepresenting facts

Balance sheet

Assets = Liabilities + Owners Equity

(Another word for Owners Equity is Net Worth)

Income Statement Equation

Sales - Expenses = Profit or Loss

Expenses go under which sheet

Income statement

How long can accounting periods be

One month, three months (quarter), one year (fiscal year)

Where do the following belong

Cash: Assets (Balance Sheet)

Property, plant & equipment: Assets (Balance Sheet)

Capital Stock: Owners Equity (Balance Sheet)

Retained Earnings: Owners Equity (Balance Sheet)

Accounts Receivable: Assets (Balance Sheet)

Long Term Debt: Liabilities (Balance Sheet)

Accounts Payable: Liabilities (Balance Sheet)

Inventory: Assets (Balance Sheet)