Chapter One Questions

Chapter One Questions - Chapter One Questions 1. List four...

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Unformatted text preview: Chapter One Questions 1. List four of your personal resources. Cash, textbooks, pencils, notebooks, clothes, car, stereo, and CDs. 2. Why do businesses want resources? To achieve their goals . The more resources a business has, the more alternatives it has available and the easier it probably is to attain its goals . For example, Sears can sell more merchandise with stores and display equipment than it can just through catalogs and the internet. 3. List three ways that companies get resources. Borrow, owners' investments, generate through management's operation of the companies. 4. When companies borrow money from banks, what is the name of the fee that the companies are charged for using the banks' money? Interest. 5. Why do owners invest their money in companies? Owners have a right to any resources generated by managements' operations of the companies . Also, stock certificates may appreciate in value. 6. List the four questions for which financial reporting systems provide information. What are the company's resources? Where did the company get its resources? What did management do with the company's resources? What did the company do with any resources generated by management's operation of the company? 7. Identify the two things a company can do with any resources management generates through operations. The resources can be given to the owners (dividends). The resources can be kept (or retained) in the company. 8. What are the pieces of paper called that owners receive when they invest in corporations? Common stock shares or certificates . 9. What is the name of the source of resources account that shows a company owes money to a supplier? Accounts payable . 10. What is the name of the resource account that shows a company's customers owe it money? Accounts receivable. 11. What is the name of the source of resources account that shows the dollar amount of resources generated through management operations and kept in the business? Retained earnings. 12. How do owners actually receive from companies some of the resources generated through management operations? Owners receive the resources when the companies declare and distribute dividends. 13. What is the name of the financial statement that provides information about what management did with the company's resources? Income statement. 14. Define the term revenue. A revenue is an increase in resources through management operations of providing services or products to customers. 15. Define the term expense. An expense is a decrease in resources through management operations of providing services or products to customers. 16. What is the difference between revenues and expenses called? Net income. 17. Why are a company's dividends not reported on its income statement?...
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This note was uploaded on 10/09/2011 for the course ACCT 60.201 taught by Professor Monty during the Spring '11 term at UMass Lowell.

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Chapter One Questions - Chapter One Questions 1. List four...

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