Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

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Multiple Choice

Which of the following best describes the major difference between financial accounting and managerial accounting?

Managerial accounting is only used by government agencies, while financial accounting is used by private companies.

Financial accounting deals only with future projections, while managerial accounting records historical transactions.

Managerial accounting is regulated by GAAP, whereas financial accounting is not.

Financial accounting focuses on providing information to external users, while managerial accounting is intended for internal decision-making.

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Verified step by step guidance

Understand the definitions of financial accounting and managerial accounting. Financial accounting involves preparing financial statements and reports for external users such as investors, creditors, and regulatory agencies. Managerial accounting focuses on providing information to internal users like managers for decision-making purposes.

Identify the key difference between the two. Financial accounting is primarily concerned with historical data and compliance with standards like GAAP (Generally Accepted Accounting Principles), while managerial accounting is more flexible and focuses on future projections and operational strategies.

Recognize the audience for each type of accounting. Financial accounting serves external stakeholders who need standardized and reliable information, whereas managerial accounting serves internal stakeholders who require detailed and actionable insights.

Consider the regulatory aspect. Financial accounting is governed by strict rules and standards such as GAAP or IFRS (International Financial Reporting Standards), ensuring consistency and comparability. Managerial accounting does not have such regulations and is tailored to the specific needs of the organization.

Conclude that the major difference lies in the purpose and audience: Financial accounting is designed for external reporting and compliance, while managerial accounting is intended for internal decision-making and operational planning.