| 1. | What is the purpose of accounting in society? |
| 2. | Technology is increasingly used to process accounting data. Why then must we study and understand accounting? |
| 3. | Identify at least four kinds of external users and describe how they use accounting information. |
| 4. | What are at least three questions business owners and managers might be able to answer by looking at accounting information? |
| 5. | Identify three actual businesses that offer services and three actual businesses that offer products. |
| 6. | Describe the internal role of accounting for organizations. |
| 7. | Identify three types of services typically offered by accounting professionals. |
| 8. | What type of accounting information might be useful to the marketing managers of a business? |
| 9. | Why is accounting described as a service activity? |
| 10. | What are some accounting-related professions? |
| 11. | How do ethics rules affect auditors’ choice of clients? |
| 12. | What work do tax accounting professionals perform in addition to preparing tax returns? |
| 13. | What does the objectivity principle imply for information reported in financial statements? Why? |
| 14. | A business reports its own office stationery on the balance sheet at its $400 cost, although it cannot be sold for more than $10 as scrap paper. Which accounting principle(s) justifies this treatment? |
| 15. | Why is the revenue recognition principle needed? What does it demand? |
| 16. | Describe the three basic forms of business organization and their key characteristics. |
| 17. | Define (a) assets, (b) liabilities, (c) equity, and (d) net assets. |
| 18. | What events or transactions change equity? |
| 19. | Identify the two main categories of accounting principles. |
| 20. | What do accountants mean by the term revenue? |
| 21. | Define net income and explain its computation. |
| 22. | Identify the four basic financial statements of a business. |
| 23. | What information is reported in an income statement? |
| 24. | Give two examples of expenses a business might incur. |
| 25. | What is the purpose of the statement of owner’s equity? |
| 26. | What information is reported in a balance sheet? |
| 27. | The statement of cash flows reports on what major activities? |
| 28. | Define and explain return on assets. |
| 29.A | Define return and risk. Discuss the trade-off between them. |
| 30.B | Describe the three major business activities in organizations. |
| 31.B | Explain why investing (assets) and financing (liabilities and equity) totals are always equal. |
| 32. | Refer to the financial statements of Best Buy in Appendix A near the end of the book. To what level of significance are dollar amounts rounded? What time period does its income statement cover? |  <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=gif::::/sites/dl/free/0072996536/wiL96536_bbyscr.gif','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (K)</a>]]>
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| 33. | Identify the dollar amounts of Circuit City’s 2005 assets, liabilities, and equity shown in its statements in Appendix A near the end of the book. |  <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=gif::::/sites/dl/free/0072996536/wiL96536_CIRCUIT_CITY_LOGO.gif','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (K)</a>]]>
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| 34. | Access the SEC EDGAR database (www. sec.gov) and retrieve Apple’s 2004 10-K (filed 12-03-2004). Identify its auditor. What responsibility does its independent auditor claim regarding Apple’s financial statements? |  <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=gif::::/sites/dl/free/0072996536/387269/wiL96536_Apple_logo_a.gif','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (1.0K)</a>]]>
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 <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=gif::::/sites/dl/free/0072996536/small_chess.gif','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (K)</a>]]> Red numbers denote Discussion Questions that involve decision-making.
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