Chapter 1 Questions.docx

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Department
Business Administration
Course
Business Administration 2100Q/R/S/T
Professor
Vicki Olds
Semester
Fall

Description
Session 2 Chapter 1 Questions: 3. Internal users refer to those within the firm such as employees, whereas external  users of accounting are ones who are stakeholders that have an interest in the  organizations financial statements but are not working within the business. Examples  of these are investors and creditors.  7. a)  ­ All profits are kept  ­ Autonomy is decision making  ­ Unlimited liability  ­ Lack of capital b)  ­ More capital raised ­ Workload is split  ­ Unlimited Liability  c)  ­ A lot of capital is earned  ­ Separate legal entity (limited liability)  ­ Divorce between ownership and control  11.  a) Resources owned by a business that create economic value e.g. equipment  b) Debts and obligations of a business e.g. accounts payable  c) Shareholders claim on the businesses assets.  d) Money made from day to day activities of the business e.g. inventory sales  15. An accounting time period that is one year in length. Many companies choose to  end their accounting term when their inventory or operations are at a low.  E1­9. Liability, Asset, Liability, Asset, Asset, SE, Asset, Liability, Asset, Asset,  Liability, Liability, SE, Asset Assets Cash 20 000 Accounts Receivable  19 500 Buildings 100 000 Equipment 30 000 Land 50 000 Merchandise Inventory  18 000 Supplies  700 Total Assets 238 200 Accounts Payable 26 200 Bank Loan Payable 30 000 Income Tax Payable  12 000 Mortgage Payable  97 500 Liabilities and Equity Other Payables 4000 Common Shares  20 000 Retained Earnings  48 500 Total Liab
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