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M10. Assignment 10.1: Financial Accounting
- Identify the roles of accountants in business
- Identify the components of a balance sheet
- Identify the components of an income statement
- Identify the components of a cash flow statement
- Identify the components of a budget
- Explain the use of various financial ratios
- Explain specific issues related to international accounting
This assignment presents questions about financial accounting and financial statements.
Answers to the exercise questions
Step 1 Answer the following questions.
Answer the following questions:
- Identify the three types of services performed by CPAs.
- How does the double-entry system reduce the chances of mistakes or fraud in accounting?
- What are the three basic financial statements, and what major information does each contain?
- Identify the three major classifications of financial statement ratios, and give an example of one ratio in each category.
- Explain how financial ratios allow managers to monitor efficiency and effectiveness.
- Explain the ways in which financial accounting differs from managerial (management) accounting.
- If you were planning to invest in a company, which of the three types of financial statements would you most want to see? Why?
- Dasar Co. reports the following data in its September 30, 2004, financial statements:
- Gross sales: $225,000
- Current assets: 40,000
- Long-term assets: 100,000
- Current liabilities: 16,000
- Long-term liabilities: 44,000
- Owners' equity: 80,000
- Net income: 7,200
- Using Dasar's financial statements, compute the following ratios:
- Current ratio
- Debt-to-equity ratio
- Return on owner's equity
- Why do currency values change daily?
- How do exchange rates affect business transactions?
- What are the problems associated with variations in financial reporting from country to country?