Financial Accounting: Multiple Choice Exam Questions

Summary

Financial accounting is a field that develops information for external decision makers. It covers many topics. Students learn what the subject is about and what it includes.

Financial accounting basics

Financial accounting develops information for external decision makers. It is one of several types of accounting. Students see examples of financial accounting in action.

Ethics in accounting

Ethical accountants are important to society. Ethical standards for accountants include competence and objectivity. Students learn about these and other standards.

Cost management systems

Students learn how cost management systems work. They see how costs are allocated. Students see examples of cost drivers and how they are used.

Budgeting and decision making

Students learn how budgets work. They see how budgets are used for planning and control. Students learn about incremental analysis and sunk costs.

Key terms

Balance sheet

Also called the statement of financial position.

Accrual basis of accounting

Recognizes the impact of transactions in the period when revenues are earned and expenses are incurred.

Activity-based costing

A system that accumulates overhead costs for each of the activities of an organization.

Incremental analysis

A way of making business decisions by looking at the costs and benefits of different options.

Return on investment

A measure of income or profit divided by the investment required to obtain that income or profit.

Sunk costs

Equipment or materials that have paid for themselves and depreciated to a point low enough in resale value that it is not worth selling.

Questions this document helps with

• What are the main types of accounting?
• What are the ethical standards for accountants?
• How are costs allocated in a business?

Summary written with AI from the document's text.