Ch 2 (IFSA) Learning Outcomes

Question 1

Identify the groups (operating, investing, and financing activities) into which business activities are categorized for financial reporting purposes and classify any business activity in the appropriate group.

Question 2

Explain the relationship of financial statement elements and accounts, and classify accounts into the financial statement elements.

Question 3

Explain the accounting equation in its basic and expanded forms.

Question 4

Explain the process of recording business transactions using an accounting system based on the accounting equations.

Question 5

Explain the need for accruals and other adjustments in preparing financial statements.

Question 6

Prepare financial statements given account balances and/or other elements in the relevant accounting equation, and explain the relationships among the income statement, balance sheet, statement of cash flows, and statement of owners’ equity.

Question 7

Describe the flow of information in an accounting system.

Question 8

Explain the use of the results of the accounting process in security analysis.