QUESTIONS
- 1. Explain
the term stakeholder. Distinguish between stakeholders with a
direct versus an indirect interest in the companies that issue accounting
reports. - 2. Why
is accounting called the language of business? - 3. What
is the primary mechanism used to allocate resources in the United States? - 4. In
a business context, what does the term market mean? - 5. What
market trilogy components are involved in the process of transforming
resources into finished products? - 6. Give
an example of a financial resource, a physical resource, and a labor
resource. - 7. What
type of return does an investor expect to receive in exchange for
providing financial resources to a business? What type of return does a
creditor expect from providing financial resources to an organization or
business? - 8. How
do financial and managerial accounting differ? - 9. Describe
a not-for-profit or nonprofit enterprise. What is the motivation for this
type of entity? - 10. What
are the U.S. rules of accounting information measurement called? - 11. Explain
how a career in public accounting differs from a career in private
accounting. - 12. Distinguish
between elements of financial statements and accounts. - 13. What
role do assets play in business profitability? - 14. To
whom do the assets of a business belong? - 15. What
is the nature of creditors’ claims on assets?
·
16. What term describes creditors’ claims on the assets of a
business?
·
17. What is the accounting equation? Describe each of its three
components.
·
18. Who ultimately bears the risk and collects the rewards
associated with operating a business?
·
19. What does a double-entry bookkeeping system mean?
·
20. How does acquiring capital from owners affect the accounting
equation?
·
21. What is the difference between assets that are acquired by
issuing common stock and those that are acquired using retained earnings?
·
22. How does earning revenue affect the accounting equation?
·
23. What are the three primary sources of assets?
·
24. What is the source of retained earnings?
·
25. How does distributing assets (paying dividends) to owners
affect the accounting equation?
·
26. What are the similarities and differences between dividends and
expenses?
·
27. What four general-purpose financial statements do business
enterprises use?
·
28. Which of the general-purpose financial statements provides
information about the enterprise at a specific designated date?
·
29. What causes a net loss?
·
30. What three categories of cash receipts and cash payments do
businesses report on the statement of cash flows? Explain the types of cash
flows reported in each category.
·
31. How are asset accounts usually arranged in the balance sheet?
·
32. Discuss the term articulation as it relates to
financial statements.
·
33. How do temporary accounts differ from permanent accounts? Name
three temporary accounts. Is retained earnings a temporary or a permanent
account?
·
34. What is the historical cost concept and how does it relate to
the reliability concept?
·
35. Identify the three types of accounting transactions discussed
in this chapter. Provide an example of each type of transaction, and explain
how it affects the accounting equation.
·
36. What type of information does a business typically include in
its annual report?
·
37. What is U.S. GAAP? What is IFRS?