Questions
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College Accounting Chapter 1: Accounting in Business Name _____________________________ Date __________ Period ____ 1-1 What is the purpose of accounting? __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ 1-2 What is the relation between account and record keeping? __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ 1-3 Identify some advantages of technology for accounting __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ 1-4 Identify the internal and external users of accounting information INTERNAL ___________________ ___________________ ___________________ ___________________ ___________________ ___________________ ___________________ ___________________ ___________________ ___________________ EXTERNAL ___________________ ___________________ ___________________ ___________________ ___________________ ___________________ ___________________ ___________________ ___________________ ___________________ 1-5 Identify at least five types of managers who are internal users of accounting information __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ 1-6 What are internal controls and why are they important? __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ 1-7 What three step guidelines can help people make ethical decisions? __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ 1-8 Why are ethics and social responsibility valuable to organizations? __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ 1-9 Why are ethics crucial in accounting? __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ 1-10 Who sets U.S. accounting rules? And what are these rules called? __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ 1-11 How are U.S. companies affected by international accounting standards? __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ Accounting Principles 1-12 State the Cost Principle __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ What does objectivity mean? __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ How are the objectivity concept and the cost principle related? __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ What is the revenue recognition principle? __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ What is the Expense recognition principle (AKA Matching Principle)? __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ What is the full disclosure principle? __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ Accounting Assumptions What is the going-concern assumption? __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ What is the monetary unit assumption? __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ What is the time period assumption? __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ What is the business entity assumption? __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ 1-15 What are the three basic forms of business organization? __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ 1-16 Identify the owners of corporations and the terminology for ownership units __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ What is the accounting equation? __________________________________________________________________________________________________ Define assets __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ Define liabilities __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ Define equity __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ Define withdrawals __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ Define revenues __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ Define Expenses __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ Define Net Income __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ 1-17 When is the accounting equation in balance, and what does that mean? __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ 1-18 How can a transaction not affect any liability and equity accounts? __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ 1-19 Describe a transaction increasing equity and one decreasing it __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ 1-20 Identify a transaction that decreases both assets and liabilities __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ 1-21 What is on an income statement? __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ What is on a Statement of owner’s equity? __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ What is on a Balance sheet? __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ 1-22 Describe the link between the balance sheet and the statement of owner’s equity __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ 1-23 Discuss the three major sections of the statement of cash flows. __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________
