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 primary difference between financial accounting and managerial accounting?

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

Financial accounting deals exclusively with non-monetary information, while managerial accounting deals with monetary information.

Financial accounting is only concerned with future projections, while managerial accounting records historical data.

Financial accounting focuses on providing information to external users, while managerial accounting focuses on internal users.

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Verified step by step guidance

Understand the key concepts of financial accounting and managerial accounting. Financial accounting is primarily concerned with providing information to external users such as investors, creditors, and regulatory agencies. Managerial accounting, on the other hand, focuses on providing information to internal users like managers and employees for decision-making purposes.

Recognize the regulatory framework. Financial accounting is governed by Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS), ensuring consistency and comparability of financial statements. Managerial accounting is not regulated by GAAP or IFRS and is more flexible to meet internal needs.

Identify the type of information provided. Financial accounting deals with monetary information that is historical in nature, such as past transactions and financial performance. Managerial accounting may include both monetary and non-monetary information, and it often focuses on future projections, budgets, and operational data.

Consider the audience. Financial accounting targets external stakeholders who need reliable and standardized information to make investment or lending decisions. Managerial accounting is tailored to internal stakeholders who require detailed and specific data to manage operations effectively.

Review the correct answer provided in the problem. The primary difference is that financial accounting focuses on external users, while managerial accounting focuses on internal users. This distinction highlights the purpose and audience of each type of accounting.