Eye Openers

Topics: Generally Accepted Accounting Principles, Accounts receivable, Income statement Pages: 2 (582 words) Published: January 29, 2012
Diego Fuentes
ACG2021 10:00a
Chung Collen
Eye Openers
1. What is the objective of most businesses?
The objective of most businesses is to maximize profits.
2. What is the difference between a manufacturing business and a service business? Is a restaurant a manufacturing business, a service business, or both? The differences between a manufacturing business and a service business is that a manufacturing business changes basic inputs into products that are sold to individual customers and a service business provides services rather than products to customers. 3. Why are most large companies like Microsoft, PepsiCo, Caterpillar, and AutoZone organized as corporations? These companies are organized as corporations because ownership is divided into shares of stocks and they can obtain large amounts of resources by selling stocks. 4. Who are normally included as the stakeholders of a business? The stakeholders of a business are normally are owners, suppliers, customers, and employees. 5. What is the role of accounting in business?

Accounting provides information for managers to use in operating the business. In addition, accounting provides information to other stakeholders to use in assessing the economic performance and condition of the business. 6. Rebecca Olson is the owner of Aquarius Delivery Service. Recently, Rebecca paid interest of $1,850 on a personal loan of $30,000 that she used to begin the business. Should Aquarius Delivery Service record the interest payment? Explain No, Aquarius Delivery Service should not record the interest payment because the loan was taken out of Rebecca’s personal account and how the GAAP say do not mix personal with business costs. 7. On February 3, Dependable Repair Service extended an offer of $80,000 for land that had been priced for sale at $90,000. On March 6, Dependable Repair Service accepted the seller’s counteroffer of $88,000. Describe how Dependable Repair Service should record the land....
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