Financial Information

1. What is financial accounting?

2. How does financial accounting differ from managerial accounting?

3. List the potential users of the information provided by financial accounting.

4. What is a corporation?

5. How does a business become a corporation?

6. Why would a business want to become a corporation?

7. What is the board of directors of a corporation?

8. Why do individuals or entities choose to invest in the capital stock of corporations?

9. How does an investor differ from a creditor?

10. What is financial information?

True or False

1. ____ Financial accounting helps with decisions made inside an organization.

2. ____ Typically, a sole proprietor will be able to raise money easier than a corporation.

3. ____ Employees are not users of the information provided by financial accounting.

4. ____ The board of directors of a corporation is elected by its shareholders.

5. ____ Investors who hold investments in a stock longer than a year may enjoy a tax benefit.

6. ____ Corporations are required by law to pay dividends to their shareholders.

7. ____ Purchasing stock is typically a riskier investment than opening a savings account.

8. ____ Financial information is communicated in monetary terms but may be explained verbally.

9. ____ Accountants are the only users of the information provided by financial accounting.

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10. ____ An entity that loans a company money is referred to as a “shareholder.”