Assignment one questions and answers
Identify the following users of accounting information as either an internal or an external user.
Accounting
External / Internal
information user
1. Shareholders External
2. Creditors External
Nonexecutive External
3. employee
Research and development director
4. Internal
5. Purchasing manager Internal
Human resources director
6. Internal
Production Internal
7. supervisors
Distribution managers
8. Internal
Part B
Identify which questions are to be asked by internal or external auditors.
Questions External / Internal
1. What are the costs of our service to customers? Internal
Should we make a five-year loan to that business?
2. External
Should we spend further research on our Internal
3. product?
Do income levels justify the current stock price?
4. External
What are reasonable payroll benefits and
5. wages? Internal
Which firm reports the highest sales and income?
6. External
7. What are the costs of our product’s ingredients? Internal
Match each of the numbered descriptions with the term or phrase it best reflects.
Description Term or Phrase
1. Amount a business earns Net income
after
paying all expenses and costs
associated with its sales and
, revenues.
2. An examination of an organization's accounting system and records that ad
Audit
Principles that determine
3. whether an action is right or
wrong. Ethics
Accounting professionals who provide services to many
4. clients.Public accountants
5. An accounting area that
includes planning future
transactions to minimize taxes
paid. Tax accounting
Match each of the numbered descriptions with the principle or assumption it best reflects.
Description Principle or Assumption
1. Revenue is recorded only when
the earnings process is Revenue recognition principle
complete.
Information is based on actual
2.
costs incurred in transactions.Cost principle
Usually created by a
3. pronouncement from Specific accounting principle
an authoritative body.
4. Financial statements reflect the assumption that the business
continues operating.Going-concern assumption
5. A company reports details
behind financial statements that
would impact users' decisions. Full disclosure principle
6. A company records the expenses incurred to generate the revenues
reported.Matching principle
Derived from long-used and
7. generally accepted accounting
practices. General accounting principle
Every business is accounted for separately from its owner or
8. owners.Business entity assumption
Identify the following users of accounting information as either an internal or an external user.
Accounting
External / Internal
information user
1. Shareholders External
2. Creditors External
Nonexecutive External
3. employee
Research and development director
4. Internal
5. Purchasing manager Internal
Human resources director
6. Internal
Production Internal
7. supervisors
Distribution managers
8. Internal
Part B
Identify which questions are to be asked by internal or external auditors.
Questions External / Internal
1. What are the costs of our service to customers? Internal
Should we make a five-year loan to that business?
2. External
Should we spend further research on our Internal
3. product?
Do income levels justify the current stock price?
4. External
What are reasonable payroll benefits and
5. wages? Internal
Which firm reports the highest sales and income?
6. External
7. What are the costs of our product’s ingredients? Internal
Match each of the numbered descriptions with the term or phrase it best reflects.
Description Term or Phrase
1. Amount a business earns Net income
after
paying all expenses and costs
associated with its sales and
, revenues.
2. An examination of an organization's accounting system and records that ad
Audit
Principles that determine
3. whether an action is right or
wrong. Ethics
Accounting professionals who provide services to many
4. clients.Public accountants
5. An accounting area that
includes planning future
transactions to minimize taxes
paid. Tax accounting
Match each of the numbered descriptions with the principle or assumption it best reflects.
Description Principle or Assumption
1. Revenue is recorded only when
the earnings process is Revenue recognition principle
complete.
Information is based on actual
2.
costs incurred in transactions.Cost principle
Usually created by a
3. pronouncement from Specific accounting principle
an authoritative body.
4. Financial statements reflect the assumption that the business
continues operating.Going-concern assumption
5. A company reports details
behind financial statements that
would impact users' decisions. Full disclosure principle
6. A company records the expenses incurred to generate the revenues
reported.Matching principle
Derived from long-used and
7. generally accepted accounting
practices. General accounting principle
Every business is accounted for separately from its owner or
8. owners.Business entity assumption
