1. Contrast U.S. GAAP statement of comprehensive income terms with their differing IFRS terms.
2. What is the difference between classifying an expense by nature or function?
3. If a functional expense classification is used for the s
1. What distinguishes a merchandising business from a service business?
2. Can a business earn a gross profit but incur a net loss? Explain.
3. The credit period during which the buyer of merchandise is allowed to pay usually begins w
1. Does a discounted note payable provide credit without interest? Discuss.
2. Employees are subject to taxes withheld from their paychecks.
a. List the federal taxes withheld from most employee paychecks.
b. Give the title of the acc
1. Why might a business invest cash in temporary investments?
2. What causes a gain or loss on the sale of a bond investment?
3. When is the equity method the appropriate accounting for equity investments?
4. How does the accounting f
Chapter 2 Analyzing Transactions
1. What is the difference between an account and a ledger?
2. Do the terms debit and credit signify increase or decrease or can they signify either? Explain.
3. McIntyre Company adheres to a policy of
1. How are revenues and expenses reported on the statement of comprehensive income under (a) the cash
basis of accounting and (b) the accrual basis of accounting?
2. Is the matching concept related to (a) the cash basis of accounting
1. Why do some accountants prepare an end-of-period spreadsheet?
2. Describe the nature of the assets that compose the following sections of a statement of financial position:
(a) current assets, (b) property, plant, and equipment.
1. What are the three classifications of receivables?
2. Dans Hardware is a small hardware store in the rural township of Twin Bridges. It rarely extends credit
to its customers in the form of an account receivable. The few customers
1. ONeil Office Supplies has a fleet of automobiles and trucks for use by salespersons and for delivery of
office supplies and equipment. Collins Auto Sales Co. has automobiles and trucks for sale. Under what
caption would the automob
1. What is the principal disadvantage of the direct method of reporting cash flows from operating
2. What are the major advantages of the indirect method of reporting cash flows from operating activities?
3. A corporation
1. Of two corporations organized at approximately the same time and engaged in competing businesses,
one issued $80 par ordinary share, and the other issued $1 par ordinary share. Do the par designations
provide any indication as to w
1. Name and describe the five elements of internal control. (b) Is any one element of internal control more
important than another?
2. Why should the employee who handles cash receipts not have the responsibility for maintaining the
1. Describe the two distinct obligations incurred by a corporation when issuing bonds.
2. Explain the meaning of each of the following terms as they relate to a bond issue: (a) convertible, (b)
callable, and (c) debenture.
3. If you a
1. Before inventory purchases are recorded, the receiving report should be reconciled to what documents?
2. Why is it important to periodically take a physical inventory when using a perpetual inventory system?
3. Do the terms FIFO, a
1. What is the difference between horizontal and vertical analysis of financial statements?
2. What is the advantage of using comparative statements for financial analysis rather than statements for a
single date or period?
3. The cur
1. Name some users of accounting information.
2. What is the role of accounting in business?
3. Why are most large companies like Microsoft, PepsiCo, Caterpillar, and AutoZone organized as
4. Josh Reilly is the owner of