Chapter 1( not done)

Question 1

Trading vs service biz

Answer 1

• Trading business buys goods from its supplier and sels it to its customer
• Service business provides service to its customers

Question 2

2. 2 diff of SP vs LLP

Answer 2

• In a SP the only owner contributes capital to set up the business
• When the SP incurrs a debt the sole owner is expected to pay it off by selling his or her personal assets
  -In a LLP there are 2 or more partners who contribute capital to set up the business
  -If a LLP gets a loss, no one is expected to pay off the debts, unless the debts was incurred due to one partners wrong ful actions. Then that partner is expected to pay off the debts.

Question 3

2 diff of SP vs PLC

Answer 3

• In a SP the only owner contributes capital to set up the business
• When the SP incurrs a debt the sole owner is expected to pay it off by selling his or her personal assets
  -A PLC is set up when no less than 50 partners buy shares to contribute capital.
• When a PLC incurrs a debt no one is exected to pay them off, but they might not get dividends for that year

Question 4

Stakeholders

Answer 4

Stakeholders are group of people who make use of iformation about the business to make decisions.

Question 5

Stewards

Answer 5

Stewards are responsible for managing the resources of the business on behalf of the owners

Question 6

6. Role of Accounting

Answer 6

accouting is an information system that provides accounting information for stake holders to ake informed decisions regarding management of resources and performance of the business.

Question 7

What does an accountant do to help stakeholders make better decisions?

Answer 7

Accountants adapt, solve problems, think critically and provide accounting and non-accounting information for decision making and provide timely, relevant and credible information based on accounting theory, which are easily and appropriately understood by stakeholders.

Question 8

Professional ethics: Integrity

Answer 8

An accountant with intergrity is honest and straight forward in all professional relationships

Question 9

9. Professional ethics: Objectivity

Answer 9

An accountant who is objective will not let bias, conflict of interest or the undue influence of others override his or her professional judgement