Ch2prob - Ketz-BS, IS, and SCSE Page 2-41 REVIEW QUESTIONS...

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Ketz--BS, IS, and SCSE Page 2-41 REVIEW QUESTIONS 1. Differentiate among service companies, merchandisers, and manufacturers 2. Distinguish among sole proprietorships, partnerships, and corporations. 3. What is a balance sheet? 4. What are assets, liabilities, and stockholders’ equity? 5. What is meant by operating cycle and what is its significance? 6. What are current assets? Name some current assets. 7. Companies can buy stocks and bonds and other securities of other firms. What are the three types of investment accounts? 8. What inventories exist for a service company, a merchandiser, and a manufacturer? 9. What are investments and funds? Name some assets found in the section labeled investments and funds. 10. What is property, plant, and equipment? Name some assets that are typically categorized as property, plant, and equipment. 11. What is the book value of an asset? 12. What are intangible assets? Name some intangible assets. 13. What are current liabilities? What are long-term liabilities? Give examples of each. 14. What accounts comprise the owner’s equity section of a sole proprietorship and a partnership? 15. What is contributed capital? What accounts are usually found in this section? 16. What is retained earnings? 17. What is treasury stock? 18. What is an income statement? 19. Define revenue, gain, expense, loss, and net income. 20. What are sales, sales discounts, and sales returns and allowances?
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Ketz--BS, IS, and SCSE Page 2-42 21. What are purchases, purchase discounts, and purchase returns and allowances? 22. Indicate the difference between freight in and freight out. 23. What is earnings per share? 24. There are three manufacturing costs. Name them. 25. What is the difference between direct materials and indirect materials? 26. What is the difference between direct labor and indirect labor? 27. What is a statement of changes in stockholders’ equity? 28. What makes up the statement of changes in owner’s equity in a sole proprietorship? partnership? 29. What comprises the statement of changes in stockholders’ equity in a corporation? DISCUSSION QUESTIONS 1. Recall the discussion in chapter 1 about relevance—the property that information is pertinent to a particular decision that needs to be made. The Financial Accounting Standards Board claims that relevance has three components: predictive value, feedback value, and timeliness. Predictive value means that the variable can be used to predict things important to the decision maker. Feedback value refers to the variable’s confirming beliefs about things important to the decision maker. Timeliness implies that the information is released in time to assist individuals in making decisions. Investors and creditors probably feel that the two most important statistics
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This note was uploaded on 01/26/2011 for the course HRIM 318 taught by Professor Howard,paul during the Fall '10 term at Pennsylvania State University, University Park.

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Ch2prob - Ketz-BS, IS, and SCSE Page 2-41 REVIEW QUESTIONS...

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