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3. (a) Who are internal users of accounting data? (b) How does accounting provide relevant data to these users ?
Answer : (a) Internal users are those who plan, organize, and run the business and therefore are officers and other decision makers. (b) To assist management, accounting provides internal reports. Examples include financial comparisons of operating alternatives, projections of income from new sales campaigns, and forecasts of cash needs for the next year.
13. (a) Define the terms assests, liabilities, and equity. (b) What items affect equity?
Answer : (a) Assets are resources owned by a business. Liabilities are claims against assets. Put more simply, liabilities are existing debts and obligations. Owners equity is the own ership claim on total assets. (b) Owners equity is affected by owners investments, drawings, revenues, and expenses.
14. Which of the following items are liabilities of Stanley Jewelry Stores? a) b) c) d) e) Cash. Account payable. Dividends. Accounting receivable. Supplies. f) g) h) i) Equipment. Salaries payable. Service revenue. Rent expense.
Answer : The liabilities are: (b) Accounts payable and (g) Salaries payable.
17. Indicated how the following business transactions affect the basic accounting equation. a) b) c) d)
Answer : a. b. c. d. Decrease assets and decrease owners equity. Increase assets and decrease assets. Increase assets and increase owners equity. Decrease assets and decrease liabilities.
Paid cash for janitorial services. Purchased equipment for cash. Received cash in exchange for ordinary shares. Paid Accounts payable in full.
18. Listed below are some items found in the financial statements of Alex Greenspan Co. Indicated in which financial statement(s) the following items would appear. a) Service revenue. b) Equipment. c) Advertising expense.
Answer :
a) Income statement. b) Balance sheet. c) Income statement.
d) Balance sheet. e) Balance sheet and owners equity statement. f) Balance sheet.