Answers to Section 1 Self Review

1. The results of the accounting process—financial statements—communicate essential information about a business to concerned individuals and organizations.
2. Periodic reports that summarize the financial affairs of a business.
3. Clerk, bookkeeper, and accountant.
4. d. Securities and Exchange Commission
5. b. Uniform CPA Examination
6. Current sales and expenses figures, anticipated sales and expenses, and the cost of the expansion.

Answers to Section 2 Self Review

1. GAAP help to ensure that financial information fairly presents a firm’s operating results and financial position.
2. FASB develops proposed statements and solicits feedback from interested individuals, groups, and companies. FASB evaluates the opinions received and votes on the statement.
3. Accounting standards that are changed and refined in response to changes in the environment in which businesses operate.
4. b. social entity
5. c. partnership
6. The shareholders are not responsible for the debts and taxes of the corporation. Corporations can continue in existence indefinitely.

Answers to Comprehensive Self Review

1. To obtain the objective opinion of a professional accountant from outside the company that the statements fairly present the operating results and financial position of the business and that the information was prepared according to GAAP.
2. A sole proprietorship is a business entity owned by one person. A corporation is a separate legal entity that has a legal right to own property and do business in its own name.
3. To gather and communicate financial information about a business.
4. Recording, classifying, summarizing, interpreting, and communicating financial information about a business.
5. Sole proprietorship, partnership, and corporation.