Questions 1-6, page 31-32
Business is organization activities which provide goods and services to
consumers and companies in order to make a profit. All businesses have same goal
that is making a profit.
2. An asset is a future economic benef
Chapter 3 Questions 1-7
Anexternal event involves interaction between the entity and its environment.
For example, the payment of wages to an employee is an external event, as is a sale to
Aninternal event occurs entirely within the entity.
Chapter 4 Question
1. The accountant cannot show a stockholder or other user the company's assets,
such as cash and buildings. The accountant describes with words and numbers that
the various items in the financial statements.
Accountants strive to pre
Chapter 1 Questions
1. People who have extra money temporarily and lend money to people have good ideas and
2. Financial management is the subarea that deals with a firms decisions in acquiring and using
the cash that is received from inves
Chapter 2 Problem
2-4 Income Statement The Fitness Studio, Inc.s, 2012 income statement lists the
following income and expenses: EBIT = $773,500, interest expense $100,000, and
taxes $234,500. The firm has no preferred stock outstanding and 100,000 shares
4-1 Time Line Show the time line for a $600 cash inflow today, a $726 cash
outflow in year 2, and a 10 percent interest rate. (LG1)
Cash Flow 600
Period 0 10%
4-2 Time Line Show the time line for a $400 cash outflow today, a $518 ca