- 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?