Exercise 1-2 Identifying accounting users and uses C2
Part A. Identify the following questions as most likely to be asked by an internal (1) or an external (E) user of accounting information.
______1. Which inventory items are out of stock?
______2. Should we make a five-year loan to that business?
______3. What are the costs of our product's ingredients?
______4. Should we buy: hold or sell a company's stock?
______5. Should we spend additional money for redesign of our product?
______6. Which firm reports the highest sales and income?
______7. What are the costs of our service to customers?
Part B. Identify the following users as either an internal (I) or an external (E) user.
______1. Research and development executive
______2. Human resources executive
______3. Politician
______4. Shareholder
______5. Distribution manager
______6. Creditor
______7. Production supervisor
______8. Purchasing manager
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Chapter 1 Solutions
Fundamental Accounting Principles
- Codification Situation You are conducting an accounting research project for your boss. Your boss has asked you to determine the appropriate U.S. GAAP that specifies how your company should recognize revenues from the sales of products in a retail store. Your boss is confused because most customers pay cash, but some customers purchase on credit terms, and pay in cash 30 days later. Your manager also wants you to determine the GAAP guidance for how revenue should be recognized in income. Your manager has a lot of knowledge and experience in accounting and has heard about, but has never used, the FASB Accounting Standards Codification system. Directions Use the FASB Accounting Standards Codification system to conduct the research your manager has assigned to you. Use the Codification to determine how to recognize revenue from retail sales, including the right to return. Be prepared to show your manager the specific FASB ASC references that provide the appropriate guidance. Also prepare a brief memo explaining to your manager the different levels of the Codification and how to use the Codification system.arrow_forwardExercise 1-31 Decisions Based on Accounting Information Decision-makers use accounting information in a wide variety Of decisions including the following: 1. Deciding whether or not to lend money to a business 2. Deciding whether or not an individual has paid enough in taxes 3. Deciding whether or not to place merchandise on sale in order to reduce inventory 4. Deciding whether Or not to invest in a business 5. Deciding whether or not to demand additional benefits for employees Required: Match each decision with one of the following decision-makers who is primarily responsible for the decision: a government (G), an investor (I), a labor union (U), business managers (M), or a bank (B).arrow_forward9:44 Mc Graw Hill Which of the following is an external user of accounting information? Multiple Choice Purchasing manager. Human resource manager. Lender. Chief executive officer (CEO). Marketing manager. Help Savarrow_forward
- of economic events is the part of the accounting process that involves Communication O a. preparing accounting reports Ob.identifying economic events Oc. quantifying transactions into dollars and cents O d. recording and classifying informationarrow_forward. 1.3 The primary purpose of what type of business is to serve a particular need in the community? A. for-profit B. not-for-profit C. manufacturing D. retail Chapter 1 Role of Accounting in Society 5 3arrow_forward1. Explain each accounting principles Accrual principle Conservatism principle Consistency principle Cost principle Economic entity principle Full disclosure principle Going concern principle Matching principle Materiality principle Monetary unit principle Reliability principle Revenue recognition principle Time period principle 2. Differentiate the types of business according to its activity: Service business Merchandising business Manufacturing businessarrow_forward
- docs.google.com/forms choose the right answer Net profit is calculated in which of the following account? Trading account O Trial balance Profit and loss account C Balance sheet choose the right answer Goods returned by customer will be debited to which account? Return outward Purchases A/C O Return inward Customer's A/c Oarrow_forwardWhat accounting activities make a merchandising business differ from a service business? A. owner's capital and drawing account B. purchasing of supplies and insurance C. purchasing and selling of products Alh Fh Aharrow_forwardACCOUNTING PROCESS Match the following steps of the accounting process with their definitions. Analyzinga. Telling the results Recordingb. Looking at events that have taken place and thinking about how they affect the business Classifying Summarizingc. Deciding the importance of the various reports Reportingd. Aggregating many similar events to provide information that is easy to understand Interpretinge. Sorting and grouping like items together f. Entering financial information into the accounting systemarrow_forward
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