Chapter 1 - Tutorial Questions and exercise

Chapter 1 - Tutorial Questions and exercise

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ACCT 1002 – INTRODUCTION TO FINANCIAL REPORTING TUTORIAL AND ADDITIONAL EXERCISES ON CHAPTER 1 – INTRODUCTION TO FINANCIAL STATEMENTS SEPTEMBER 10 TH 2015
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RECAP Describe the primary forms of business organization. Identify the users and uses of accounting information. Explain the three principal types of business activity Describe the content and purpose of each of the financial statements. Explain the meaning of assets, liabilities, and stockholders’ equity, and state the basic accounting equation. Describe the components that supplement the financial statements in an annual report.
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TUTORIAL QUESTION E1-1 Here is a list of words or phrases discussed in this chapter: 1. Corporation 6. common stock 2. Creditors 7. Accounts Payable 3. Accounts receivable 8. Auditors opinion 4. Partnership 5. stockholder
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TUTORIAL QUESTION E1-1 A) an expression about whether financial statements are presented in conformance with generally accepted accounting principles. 8. Auditors Opinion B) A business enterprise that raises money by issuing shares of stock. 1. Corporation C) The portion of stockholders’ equity that results from receiving cash from investors . 6. Common Stock D) Obligations to suppliers of goods. 7. Accounts Payable
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TUTORIAL QUESTION E1-1 E) Amounts due from customers 3. Accounts Receivable F) A party to whom a business owes money 2. Creditor G) A party that invests in common stock. 5. Shareholders H) A business that is owned jointly by two or more individuals but does not issue stock. 4. Partnership
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TUTORIAL QUESTION P1-1A Presented below are five independent situations. In each case explain what form of organization the business is likely to take- sole proprietorship, partnership, or corporation. Gives reasons. A) Three physics professors at MIT have formed a business to improve the speed of information transfer over the Internet for stock exchange transactions. Each has contributed an equal amount of cash and knowledge to the venture. Although their approach looks promising, they are concerned about legal liabilities that their business might confront.
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TUTORIAL QUESTION P1-1A The concern over legal liability would make the corporate form a better choice over a partnership. Also, the corporate form will allow the business to raise cash more easily, which may be of importance in a rapidly growing industry. B) Daniel Remington, a college student looking for summer employment, opened a bait shop in a small shed at a local marina. Daniel should run his business as a sole proprietor. He has no real need to raise funds, and he doesn’t need the expertise provided by other partners. The sole proprietorship form would provide the easiest form. One should avoid a more complicated form of business unless the characteristics of that form are needed.
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TUTORIAL QUESTION P1-1A C) Terry Hill and Bill Mayo each owned separate shoe manufacturing businesses. They have decided to combine their businesses. They expect
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