MODULE 2

Question 1

Question: What are the three components of accounting as an information system?

Answer 1

Answer: Input, process, and output.

Question 2

Question: What does accounting as an information system do?
.

Answer 2

Answer: It collects, processes, and communicates financial information of any entity

Question 3

Question: What are the main outputs of financial accounting?

Answer 3

Answer: Financial statements.

Question 4

Question: Name the four types of financial statements.

Answer 4

Answer:

Statement of Financial Position
Statement of Comprehensive Income
Statement of Changes in Equity
Statement of Cash Flows

Question 5

Question: What are general purpose financial statements intended for?

Answer 5

Answer: To meet the needs of a broad range of users.

Question 6

Question: What are specific purpose financial statements intended for?

Answer 6

Answer: To meet the needs of specific or particular users.

Question 7

Question: What are the components of a complete set of general-purpose financial statements?

Answer 7

Answer: Notes to Financial Statements, Statement of Financial Position, Statement of Comprehensive Income, Statement of Changes in Equity, and Statement of Cash Flows.

Question 8

Question: What are the five major types of accounts in financial accounting?

Answer 8

Answer: Assets, Liabilities, Equity, Income, and Expense.

Question 9

Question: What are the elements under financial position?

Answer 9

Answer: Assets, Liabilities, and Equity.

Question 10

Question: What are the elements under financial performance?

Answer 10

Answer: Income and Expense.

Question 11

Question: Define assets and give examples.

Answer 11

Answer: Assets are resources controlled by the entity as a result of past transactions, expected to bring future economic benefits. Examples: Cash, Inventories, Land, Building, Equipment.

Question 12

Question: What are liabilities?

Answer 12

Answer: Present obligations of the entity arising from past transactions, expected to result in an outflow of resources. Examples: Accounts Payable, Salaries Payable, Interest Payable.

Question 13

Question: Define equity.

Answer 13

Answer: Equity is the residual interest in the assets of the entity after deducting all liabilities.

Question 14

Question: What is income?

Answer 14

Answer: Increases in economic benefits during the accounting period.

Question 15

Question: What is revenue?

Answer 15

Answer: Revenue arises in the ordinary course of business, such as sales, fees, and interest.

Question 16

Question: What are gains?

Answer 16

Answer: Increases in economic benefits not arising from the ordinary course of business.

Question 17

Question: Define expenses and provide examples.

Answer 17

Answer: Expenses are decreases in economic benefits during the accounting period. Examples: Salaries Expense, Interest Expense, Utilities Expense.

Question 18

Question: What are the examples of equity for different business types?

Answer 18

Answer:

Sole Proprietorship: Owner’s Equity
Partnership: Partner’s Equity
Corporation: Shareholder’s Equity