Study Set Content:
What is the broadest branch of accounting focused on the needs of external users?
Financial Accounting
How is information communicated in financial accounting?
Information is communicated in a complete set of financial statements.
What type of data is financial accounting primarily concerned with?
Financial accounting is primarily concerned with processing historical data.
For what purpose does financial accounting use information?
Financial accounting uses information for decision-making needs.
Who are the primary users of management accounting information?
The primary users of management accounting information are internal users such as managers and employees.
What does management accounting involve?
Management accounting involves financial analysis, budgeting and forecasting, cost analysis, evaluation of business decisions and similar areas.
Which branch of accounting handles the recording of financial transactions of a business?
Financial Accounting
What does Government Accounting deal with?
Government Accounting deals with how the funds of the government are recorded and reported.
What are the two types of Auditing?
The two types of Auditing are Internal and External.
What is the purpose of Internal Auditing?
Internal Auditing sees to it that established accounting procedures are being followed.
What does External Auditing involve?
External Auditing involves the examination of the books of accounts to see if established criteria are followed.
What does Tax Accounting involve?
Tax Accounting involves the preparation of income tax returns and the determination of correct amount of taxes due and payable to the government.
What is Cost Accounting primarily concerned with?
Cost Accounting concerns primarily on cost collection, allocation, and control of producing goods and services.
What is a direct cost in cost accounting?
A direct cost is a cost that can economically be traced to a cost object such as materials, labor, etc.
Can you give an example of an indirect cost?
Yes, an example of an indirect cost would be the costs of supplies used in the factory.
What does fixed cost mean in terms of cost accounting?
Fixed costs are costs that do not change within a relevant range of activity. Examples include rent of a factory building and insurance costs.
How does a variable cost differ from a fixed cost?
A variable cost changes as the level of activity or production increases. Examples include electricity and water bill, labor costs, etc. Unlike fixed costs, they are not constant and can fluctuate based on the level of production or activity.
How does a variable cost differ from a fixed cost?
A variable cost changes as the level of activity or production increases. Examples include electricity and water bill, labor costs, etc. Unlike fixed costs, they are not constant and can fluctuate based on the level of production or activity.
Can you provide examples of both direct and indirect costs?
Sure, examples of direct costs include materials and labor used directly in production. Indirect costs could be supplies used in the factory which cannot be traced to a specific product or service.
What type of cost would rent for a factory building fall under?
Rent for a factory building would fall under fixed costs as it does not change within a relevant range of activity.
