Chapter #1: Introduction to Financial Statements
BE 1-1 Match each of the following forms of business organization with a set of characteristics: sole proprietorships (SP), partnership (P), corporation (C). _P__ Shared control, tax advantages, increased skills and resources. _SP_ Simple to set up and maintains control with owner.
_C__ Easier to transfer ownership and rise funds, no personal liability. BE 1-2 Match each of the following types of evaluation with one of the listed users of accounting information. Trying to determine whether the company complied with tax laws. Trying to determine whether the company can pay its obligations. Trying to determine whether an advertising proposal will be cost-effective. Trying to determine whether the company’s net income will result in a stock price increase. Trying to determine whether the company should employ debt or equity financing. _4_ Investors in common stock.
_3_ Marketing managers.
_5_ Chief Financial Officer.
_1_ Internal Revenue Service.
BE 1-3 Indicate in which part of the statement of cash flows each item would appear: operating activities (O), investing activities (I), or financing activities (F). _O_ Cash received from customers.
_F_ Cash pay to stockholders (dividends).
_F_ Cash received from issuing new common stock.
_O_ Cash paid to suppliers.
_I__ Cash paid to purchase a new office building.
BE 1-4 Presented below are a number of transactions. Determine whether each transaction affects common stock (C), dividends (D), revenue (R), expense (E), or does not affects stockholder’s equity (NSE). Provide titles for the revenues and expenses. Costs incurred for advertising. _E_ → Advertising expense
Assets received for services performed. _R_ → Service revenue Costs incurred for insurance. _E_ → Insurance expense
Amount paid to employees. _E_ → Salaries and wage expense
Cash distributed to stockholders. _D_ → Dividends
Assets received in...
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