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

Tom is considering two types of accounting for his new business: financial accounting and managerial accounting. If Tom wants to prepare reports primarily for external stakeholders such as investors and creditors, which type of accounting should he use?

Managerial accounting

Cost accounting

Tax accounting

Financial accounting

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Verified step by step guidance

Understand the purpose of financial accounting: Financial accounting is designed to provide information to external stakeholders such as investors, creditors, and regulatory agencies. It focuses on preparing standardized financial statements like the balance sheet, income statement, and cash flow statement.

Contrast financial accounting with managerial accounting: Managerial accounting is primarily used for internal decision-making and focuses on providing detailed reports to managers within the organization. It is not intended for external stakeholders.

Consider the needs of external stakeholders: External stakeholders require reliable, consistent, and standardized financial information to assess the financial health and performance of a business. Financial accounting fulfills this need by adhering to established accounting standards such as GAAP or IFRS.

Eliminate other options: Cost accounting focuses on analyzing and controlling costs within the business, while tax accounting deals with compliance and preparation of tax returns. Neither of these is primarily intended for external stakeholders.

Conclude that financial accounting is the appropriate choice: Since Tom wants to prepare reports for external stakeholders, financial accounting is the correct type of accounting to use.