2008 ACCT 304 Ch 1 Homework Key

2008 ACCT 304 Ch 1 Homework Key - Question 1-5 The primary...

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Question 1-5 The primary objective of financial accounting is to provide investors and creditors with information that will help in evaluating the amounts, timing, and uncertainty of a business enterprise’s future cash receipts and disbursements. Question 1-6 Net operating cash flows are the difference between cash receipts and cash disbursements during a period of time from transactions related to providing goods and services to customers. Net operating cash flows may not be a good indicator of future cash flows because, by ignoring uncompleted transactions, they may not match the accomplishments and sacrifices of the period. Question 1-18 1. Assets are probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events. 2. Liabilities are probable future sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions. 3. Equity is the residual interest in the assets of any entity that remains after deducting its liabilities. 4. Investments by owners are increases in equity resulting from transfers of resources, usually cash, to a company in exchange for ownership interest. 5. Distributions to owners are decreases in equity resulting from transfers to owners. 6. Revenues are inflows of assets or settlements of liabilities from delivering or producing goods, rendering services, or other activities that constitute the entity’s ongoing major or central operations. 7. Expenses are outflows or other using up of assets or incurrences of liabilities during a period from delivering or producing goods, rendering services, or other activities that constitute the entity’s ongoing major or central operations. 8. Gains are defined as increases in equity from peripheral or incidental transactions of an entity. 9. Losses represent decreases in equity arising from peripheral or incidental transactions of an entity. 10.Comprehensive income is defined as the change in equity of an entity during a period from nonowner transactions. Question 1-23
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This note was uploaded on 10/28/2008 for the course ACCT 304 taught by Professor Ed during the Spring '08 term at Brookdale.

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2008 ACCT 304 Ch 1 Homework Key - Question 1-5 The primary...

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