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Chapter 1
USA Accounting Chapter 1
| Question | Answer |
|---|---|
| What are the three basic activities of accounting? | identifies, records and communicates |
| What are some examples of economic events relevant to business? | sole of snack chips by PepsiCo, providing of telephone services by AT&T, payment of wages by Ford Motor Company |
| What does recording consist of? | keeping systmeatic, chronological diary of events, measured in dollars and cents |
| How does a company communicate collected information to intrested users? | accounting reports |
| What are the most common collected information or accounting reports called? | financial statements |
| What does Analysis involve? | use of ratios, percentages, graphs, and charts to highlight significant financial trends and relationships |
| What does Interpretation involve? | explaining the uses, meaning, and limitations of reported data |
| What is bookkeeping? | only the recording of economic events |
| Who is an internal user? | individuals inside a company |
| What does an internal user do? | plan, organize, and run the business |
| Name some examples of an internal user? | marketing managers, production supervisors, finance directors and company officers |
| What question would a internal user ask about finace? | is cash sufficient to pay dividends to stockholders? |
| What question would a internal user ask about marketing? | what price for my product will maximize the company's net income? |
| What question would a internal user ask about Human Resources? | Can we afford to give employees pay raises this year? |
| What question would a internal user ask about Management? | Which product line is the most profitable? Should any product lines be eliminated? |
| Who are External users? | and individuals and organizations outside a company who what financial information about the company |
| Who are the two most common External users? | investors and creditors |
| Why would inverstors use account information? | to make dexisions to buy, hold or sell stock |
| Why would creditors use account information? | to evaluate the risk of granting credit or lending money |
| What are some questions asked by external users? | Is the company earning satisfactory income?How does one company in and profit compare with another? |
| What are some questions asked by external Creditors? | will the company be able to pay its debts as they come due? |
| What is an example of Taxing authorities? | Internal Revenue Service |
| What is an example of Regulatory agencies | Securities and Exchange Commission and Federal TRand Commission |
| What would a Labor union want to know about financial accounting? | whether the owners can pay increased wages and benefits |
| What would a Customer want to know about financial accounting? | whenter a company will continue to honor product warranties and support its product lines. |
Created by:
sbanks4