chapter 1 review questions

Question 1

external users

Answer 1

do not dreictly run org and have limited access to its acct info.

Question 2

example of external users

Answer 2

lenders, shareholders, boards

Question 3

internal users

Answer 3

directly manage org operations.

Question 4

example of internal users

Answer 4

ceo, and other managerial employees

Question 5

private accounting

Answer 5

acct employees working for business

Question 6

oublic acct

Answer 6

offering audit, tax, and advisory services to others

Question 7

what is fraud triangle

Answer 7

three factors that push a person to commit fraud

Question 8

what makes up fraud triangle

Answer 8

opportuity
pressure
rationalization

Question 9

opportunity

Answer 9

must be able to commit fraud with low risk of getting caughtp

Question 10

pressure

Answer 10

must feel pressure or have incentive to commit fraud

Question 11

rationalization

Answer 11

justifies fraud or does not see its criminal nature

Question 12

common business entities

Answer 12

-sole propietership
partnership
corporation
-LLC

Question 13

sole propietership

Answer 13

-1 owner
-no additional business income tax
-unlimited liability
-not a separate legal entity

Question 14

partnership

Answer 14

-2 or more
-no additional income tax
-unlimited liability (partners jointly liable)
-not a separate legal entity

Question 15

corporation

Answer 15

-shareholders by selling stock
-additoinal corporate income tax
-limited liability (shareholders not liable cor corporate acts)
-seperate entiity with same rights

Question 16

LLC

Answer 16

-members
-no additional income tax
-limited liabilities

Question 17

assets

Answer 17

resouces a company owns or controls that are expected to yield future beneifts

Question 18

liabilities

Answer 18

creditors’ claim on assets

Question 19

equity

Answer 19

shareholders claim on assets

Question 20

what does equity consist of

Answer 20

+common stock
-dividends
+revenues
-expenses

Question 21

accoutning eq

Answer 21

assets = liabilities + equity

Question 22

layout of income ststaement

Answer 22

revenues - expenses = net income

Question 23

layout of statement of retained earnings

Answer 23

beg. reatined earnings + net income - dividends = end. retained earnings

Question 24

layout of balance sheet

Answer 24

assets = liabilities + equity

Question 25

the layout of the statement of cash flows

Answer 25

+/- operating CF
+/- investing CF
+/- financing CF
= changein cash