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Chapter 1

Chapter 1 ACC100.docx

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Ryerson University
ACC 100
Else Grech

Chapter 1: 1) What are the three different forms of business organizations? What are the advantages and the disadvantages to each of these forms?  Sole proprietorship  Corporation  Partnership 2) Define the three business activities of a company and provide examples of each of these activities.  Financing o Raising funds  Investing o Purchasing equipment  Operating o Buying and selling goods and services 3) What is the purpose of financial accounting?  Branch of accounting that prepares financial statements for outside users 4) Who are the primary users of accounting information?  Owners, shareholders, accountants 5) What is the purpose of each of the financial statements? How are the financial statements interrelated?  Financial statements show the progress or current state of a company. They are important to provide information to internal and external users. They are interrelated because they all rely on each other for information. For example: income statement is needed to figure out the net income which is used on the statement of retained earnings which is then shown on the balance sheet 6) What is the accounting equation and how is it connected to the financial statements?  Assets = liabilities + owners equity 7) You are deciding whether to invest in a company shares. Which financial statement would you want to see, and which areas would you be most interested in?  Liabilities: to see who else the company
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