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ACC/206 Accounting principles II Week 1 – 11 Complete Solution – Strayer – A Graded Click on the Link Below to Purchase Complete Exam and Quizzes (Chapter 1 – 26) All Possible Questions With Answers Instant Download This is the complete TEST SOLUTION for the Book As this book is assigned for ACC 206 in Strayer university, we titled it that way, but if you are assigned with the above book you can purchase this solution for your quizzes and exams. Owners of business firms are the only people who need accounting information. Transactions that can be measured in dollars and cents are recorded in the financial information system. The hiring of a new company president is an economic event recorded by the financial information system. Management of a business enterprise is the major external user of information. Accounting communicates financial information about a business enterprise to both internal and external users. Accounting information is used only by external users with a financial interest in a business enterprise. Financial statements are the major means of communicating accounting information to interested parties. Bookkeeping and accounting are one and the same because the bookkeeping function includes the accounting process. The origins of accounting are attributed to Luca Pacioli, a famous mathematician. The study of accounting will be useful only if a student is interested in working for a profit-oriented business firm. Private accountants are accountants who are not employees of business enterprises. The study of accounting is not useful for a business career unless your career objective is to become an accountant. A working knowledge of accounting is not relevant to a lawyer or an architect. Expressing an opinion as to the fairness of the information presented in financial statements is a service performed by CPAs. Accountants rely on a fundamental business concept—ethical behavior—in reporting financial information. The primary accounting standard-setting body in the United States is the International Accounting Standards Board. The Financial Accounting Standards Board is a part of the Securities and Exchange Commission.

All the questions below are answered in the solution by the authors themselves.

Some generally accepted accounting principles have simply been accepted as appropriate because of their universal application rather than due to the action of an authoritative accounting rule-making body.

Users of financial accounting statements have both coinciding and conflicting needs for information of various types.

Valuation models attempt to relate value to the level of, uncertainty about and expected growth in these cashflows. The economic entity assumption requires that the activities of an entity be kept separate and distinct from the activities of its owner and all other economic entities. The monetary unit assumption states that transactions that can be measured in terms of money should be recorded in the accounting records. In order to possess future service potential, an asset must have physical substance. Owners’ claims to total business assets take precedence over the claims of creditors because owners invest assets in the business and are liable for losses. The basic accounting equation states that Assets = Liabilities. Accountantsrecord both internal and external transactions. Answers to True-False Statements 1 – 7 MULTIPLECHOICE QUESTIONS 41. Internal transactions do not affect the basic accounting equation because they are economic events that occur entirely within one company. The purchase of store equipment for cash reduces the owner’s equity by an equal amount. The purchase of office equipment on credit increases total assets and total liabilities. The primary purpose of the statement of cash flows is to provide information about the cash receipts and cash payments of a company during a period. Net income for the period is determined by subtracting total expenses and drawings from total revenues. Identifying is the process of keeping a chronological diary of events measured in dollars and cents. Management consulting includes examining the financial statements of companies and expressing an opinion as to the fairness of their presentation. Accountantsdo not have to worry about issues of ethics. At the time an asset is acquired, cost and value should be the same. The monetary unit assumption requires that all dollar amounts be rounded to the nearest dollar. The basic accounting equation is in balance when the creditor and ownership claims against the business equal the assets. External transactions involve economic events between the company and some other enterprise or party. In the owner’s equity statement, revenues are listed first, followed by expenses, and net income (or net loss). Users of the financial information provided by a company use that information to make capital allocation decisions. An effective process of capital allocation promotes productivity and provides an efficient market for buying and selling securities and obtaining and granting credit. While there are some differences, the S corporation basis system is similar to the rules that apply to partnerships.The tax consequences of distributions by an S corporation to a shareholder depend on the shareholder’s basis in the S corporation stock. financial markets and accounting standard-setting bodies. The cost and fair market value of an asset are the same at the time of acquisition and in all subsequent periods. Even though a partnership is not a separate legal entity, for accounting purposes the partnership affairs should be kept separate from the personal activities of the owners. The shareholder’s basis is decreased (but not below zero) by the shareholder’s share of the S corporation’s items of loss and deduction, nondeductible expenses (except expenses that are not chargeable to the capital account), depletion deduction for oil and gas property, and distributions to the shareholder that are not made from accumulated earnings and profits.This helps ensure that the shareholder only benefits once from reductions in income earned by the S corporation.