Corporate Financial Accounting

Assignment 1.docx

Corporate Financial Accounting

1. What is the objective of most businesses?

2. What is the difference between a manufacturing business and a service business?

Is a restaurant a manufacturing business, a service business, or both?

3. Name some users of accounting information.

4. What is the role of accounting in business?

5. Why are most large companies like Microsoft, PepsiCo, Caterpillar, and AutoZone

organized as corporations?

6. Barry Bergan is the owner of Elephant Delivery Service.Recently,Barry paid interest

of $3,000 on a personal loan of $40,000 that he used to begin the business. Should

Elephant Delivery Service record the interest payment? Explain.

7. On April 2, Gremlin Repair Service extended an offer of $100,000 for land that had

been priced for sale at $125,000. On May 10, Gremlin Repair Service accepted the

seller’s counteroffer of $115,000. Describe how Gremlin Repair Service should

record the land.

8. a. Land with an assessed value of $300,000 for property tax purposes is acquired

by a business for $475,000. Ten years later, the plot of land has an assessed

value of $500,000 and the business receives an offer of $900,000 for it. Should

the monetary amount assigned to the land in the business records now be

increased?

b. Assuming that the land acquired in (a) was sold for $900,000, how would the

various elements of the accounting equation be affected?

9. Describe the difference between an account receivable and an account payable.

10. A business had revenues of $600,000 and operating expenses of $715,000. Did the

business (a) incur a net loss or (b) realize net income?

11. A business had revenues of $687,500 and operating expenses of $492,400. Did the

business (a) incur a net loss or (b) realize net income?

12. What particular item of financial or operating data appears on both the income

statement and the retained earnings statement? What item appears on both the

balance sheet and the retained earnings statement? What item appears on both the

balance sheet and the statement of cash flows?

Activity 1-1A & 1-2A.jpg