Principles of Accounting
12th Edition
ISBN: 9781133626985
Author: Belverd E. Needles, Marian Powers, Susan V. Crosson
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 1, Problem 10AP
Aqua Swimming Club’s financial statements follow.
REQUIRED
- 1. ACCOUNTING CONNECTION ▶ Explain how Aqua Swimming Club’s four statements relate to each other.
- 2. BUSINESS APPLICATION ▶ Which statements are most closely associated with the goals of liquidity and profitability? Why?
- 3. BUSINESS APPLICATION ▶ If you were the owner of this business, how would you evaluate the company’s performance? Give specific examples.
- 4. ACCOUNTING CONNECTION ▶ If you were a banker considering Aqua Swimming Club for a loan, why might you want the company to be audited by an independent CPA? What would the audit tell you?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
According to concept of accounting, financial or business transaction is recorded:
a ) when cash is received or paid
b) when transaction occurs
c) when profit is computed
D) when balance sheet is prepared
===================================
Which of below users considered as Internal users of accounting information system?
a. Investor
b. Middle management
c. Bank
d. Buyer
==========================
Creditors of a business may want to use the financial statements to:
a. Be sure that after-sales service will continue
b. Be sure of an increasing share of the market
c. Check that the business is making a profit
d. Check that they are likely to be paid when due
Direction: Identify what describes the following statement. Write your answer on the blank before the number.
____________________1. It pertains to the state of one’s personal monetary affairs.
____________________2. It measures the ability to generate earnings from its resources or investments.
____________________3. It measures the ability to generate profit that ensures to pay business expenses and maintain a long-term financial success of the business.
____________________4. It measures the ability of the company to settle its short term debts.
____________________ 5. It measures how the business manage its assets or resources to produce output without wastage.
____________________6. It presents the financial statement amounts as a percentage of a base number.
____________________7. It is used to evaluate a number of issues with an entity, such as its liquidity, efficiency of operations, and profitability.
____________________8. These users of financial information are…
For each of the following descriptions choose the correct accounting concept:(a) An economic event is reported so it represents what actually happened.(b) Users find the information in the financial statements helps them to make decisions.(c)The accounting information shows the profit of a business without consideration of what the owner may want to report.(d) Financial statements make sense to business people.(e) Henry is able to confirm the information presented in the financial statements.(f)Très Chic Boutique uses the same accounting methods as other similar boutiques.
accounting concepts:
Neutrality
Faithful Representation
Relevance
Comparability
Understandability
Verifiability
Chapter 1 Solutions
Principles of Accounting
Ch. 1 - What makes accounting a valuable discipline?Ch. 1 - Prob. 2DQCh. 1 - Prob. 3DQCh. 1 - How are expenses and withdrawals similar, and how...Ch. 1 - How do generally accepted accounting principles...Ch. 1 - Why do managers in governmental and not-for-profit...Ch. 1 - Prob. 1SECh. 1 - Match the descriptions that follow with the...Ch. 1 - Determine the amount missing from each accounting...Ch. 1 - Use the accounting equation to answer each...
Ch. 1 - Use the accounting equation to answer each...Ch. 1 - Prob. 6SECh. 1 - Use the following accounts and balances to prepare...Ch. 1 - Randall Company engaged in activities during the...Ch. 1 - Prob. 9SECh. 1 - Prob. 10SECh. 1 - Prob. 1EACh. 1 - Financial accounting uses money measures to gauge...Ch. 1 - You have been asked to compare the sales and...Ch. 1 - Use the accounting equation to answer each...Ch. 1 - Daiichi Companys total assets and liabilities at...Ch. 1 - 1. Indicate whether each of the following accounts...Ch. 1 - Listed in random order are some of Oxford Services...Ch. 1 - Dukakis Company had the following accounts and...Ch. 1 - Prob. 9EACh. 1 - Prob. 10EACh. 1 - Complete the financial statements that follow by...Ch. 1 - Prob. 12EACh. 1 - Match the terms that follow with the appropriate...Ch. 1 - Prob. 14EACh. 1 - Prob. 15EACh. 1 - Prob. 1PCh. 1 - The following three independent sets of financial...Ch. 1 - Fuel Designs financial accounts follow. The...Ch. 1 - The accounts of Frequent Ad, an agency that...Ch. 1 - Athena Riding Clubs financial statements follow.Ch. 1 - A list of financial statement items follows....Ch. 1 - Three independent sets of financial statements...Ch. 1 - Prob. 8APCh. 1 - Prob. 9APCh. 1 - Aqua Swimming Clubs financial statements follow....Ch. 1 - Costco Wholesale Corporation is Americas largest...Ch. 1 - Prob. 2CCh. 1 - Prob. 3CCh. 1 - Prob. 4CCh. 1 - Refer to the CVS annual report and the financial...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- I. Direction: Identify what describes the following statement. Write your answer on the blank before the number. ____________________1. It pertains to the state of one’s personal monetary affairs.____________________2. It measures the ability to generate earnings from its resources or investments. ____________________3. It measures the ability to generate profit that ensures to pay business expenses and maintain a long-term financial success of the business. ____________________4. It measures the ability of the company to settle its short term debts. ____________________ 5. It measures how the business manage its assets or resources to produce output without wastage. ____________________6. It presents the financial statement amounts as a percentage of a base number. ____________________7. It is used to evaluate a number of issues with an entity, such as its liquidity, efficiency of operations, and profitability. ____________________8. These users of financial information are interested…arrow_forwardUsing the accounting equation to analyze transactions As the manager of Papa Sean’s restaurant, you must deal with a variety of business transactions. Give an example of a transaction that has each of the following effects on the accounting equation: Increase one asset and decrease another asset. Decrease an asset and decrease equity. Decrease an asset and decrease liability. Increase an asset and increase equity. Increase an asset and increase liability.arrow_forward1-Accounting software is related to which system of accounting? a. Manual Individual customer records b. Manual system of accounting c. Computerized accounting d. Any system of accounting 2-A Creditor of the business uses the financial statement for a. Day to day decision making related to the business b. Making the decisions to buy or sell the shares c. Evaluating the risks of granting credit or lending money d. Verifying whether the company complies with tax laws 3-For every debit there will be an equal credit according to a. Dual aspect concept b. Matching concept c. Money measurement concept d. Cost concept 4-Mr. Asif is an accountant. Purchase of Merchandise on credit for OMR 75000 was entered in Furniture Account for OMR 75000 but he posted Accounts payable entry is correct. Which of the following rectification entry is correct? a. Debit Accounts payable RO 75000 Credit Furniture RO 75000 b. Debit Purchase RO 75000 Credit Accounts payable account RO…arrow_forward
- 1. Explain and describe the type of information needed by each of these users: Revenue expenses profitability debt 2. Explain each accounting principles Accrual principle Conservatism principle Consistency principle Cost principle Economic entity principle Full disclosure principle Going concern principle Matching principle Materiality principle Monetary unit principle Reliability principle Revenue recognition principle Time period principle 3. Define and explain each qualitative characteristics of useful financial information: Verifiability Timeliness Understandability Comparability 4. Differentiate the types of business according to its activity: Service business Merchandising business Manufacturing businessarrow_forwardThe ........of the business should show the business net worth covering all of the main financial liabilities, assets and owner equity at a particular point time. A-invoice B-balance sheet C-quotation D-income statement The company has decided to put all its financial reports on its website to increase .......... with stakeholders A-transparency B- purchase C-brand identity D-liquidityarrow_forward1. Differentiate the four forms of business organizations: Sole proprietorship General Partnership Limited liability Company Corporations 2. Explain and describe the type of information needed by each of these users: Revenue expenses profitability debt 3. Explain each accounting principles Accrual principle Conservatism principle Consistency principle Cost principle Economic entity principle Full disclosure principle Going concern principle Matching principle Materiality principle Monetary unit principle Reliability principle Revenue recognition principle Time period principle 4. Define and explain each qualitative characteristics of useful financial information: Verifiability Timeliness Understandability Comparability 5. Differentiate the types of business according to its activity: Service business Merchandising business Manufacturing business 6. Name a 10 company according to the three major types of businesses 7. Define the three major elements of accounting equation:…arrow_forward
- Financial statements identify financial position, performance and changes in financial position over a period of time. The main financial statements are statement of financial position, statement of comprehensive income and statement of cash flow. These statements are prepared to show how wel I a company has performed and also give an indication of the value of the business. Many Accountants however are of the view that the financial statements are limited in their value to users. Required: 1. Identify and discuss the limitations of financial statements 2. State the objectives of International Accounting Standards Board (IASB)arrow_forwardIn this scenario, you are presented with the company’s financial records. This activity requires vigilance and a keen eye for details which is crucial as the information presented will challenge your ability to use good reasoning and critical thinking to analyze the financial data presented. You are required to only use the figures in line with your surname initial which is D. Please Answer Question 2 A Steve Osbourne is considering opening a business, but the major decision faced is how to organize the business. Steve anticipates generating a massive profit during the first year and that the following years should be relatively profitable. Although he has enough to start the business now as a partnership, he believes cash flow may be an issue as the company grows. Steve believes that the corporate form of operation will be his best option and have hired you as a consultant and seek your advice. Requirements: Answer the following questions for Steve. a. Explain the corporate…arrow_forwardHere is question The purpose of this assignment is for you to demonstrate your ability to record business transactions and then prepare a properly formatted income statement and balance sheet. The one additional requirement is that you answer the questions that you find below. Questions to be answer 1. What is the company's ending Cash balance? What is the company's ending Equity? Why is cash not equal to equity? 2. What is the company's net income for the period? 3. If you had to repay your creditors today, could you? Explain. 4. The company made a small amount of net income over the month. Explain why the equity actually decreased over the period. 5. You have recorded journal entries for the period of a month. If you were told that the business license in T12 was a annual expense, would this impact the reported net income? Explain why or why not.arrow_forward
- 1. What specific order is used when preparing the Income Statement, for the categories of Revenues & Expenses? (assume you have more than 1 revenue and more than 1 expense) 2. Why would a loan officer at a bank or a potential investor in the business prefer reading a multiple-step formatted Income Statement versus a single-step formatted Income Statement? I need help with these to question they are separate thank you.arrow_forwardChoose the appropriate letter to match the term and the definition. match these Question 2 options: Income Statement Unit of Measure Assumption Financing Activities Retained Earnings Investors Operating Activities Audit Balance Sheet 1. An example of external users of financial statements. 2. A procedure by which independent evaluators assess the accounting procedures and financial reports of a company. 3. A financial statement showing a company's assets, liabilities and stockholders equity. 4. Activities directly related to running the business to earn profit. 5. The idea that a company should report its financial data in the relevant currency. 6. The cumulative total amount of profits that have been kept by the company. 7. Transactions with lenders (borrowing and repaying cash) and…arrow_forwardThe following provides a list of transactions and a list of business activities.Transactions Business Activities1. _________Borrow from the bank. a. Financing2. _________Provide services to customers. b. Investing3. _________Issue common stock to investors. c. Operating4. _________Purchase land.5. _________Pay rent for the current period.6. _________Pay dividends to stockholders.7. _________Purchase building.Required:Match the transaction with the business activity by indicating the letter that corresponds to the appropriate business activity.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
College Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub
Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage Learning
College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
College Accounting (Book Only): A Career Approach
Accounting
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:South-Western College Pub
Survey of Accounting (Accounting I)
Accounting
ISBN:9781305961883
Author:Carl Warren
Publisher:Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
ACCOUNTING BASICS: Debits and Credits Explained; Author: Accounting Stuff;https://www.youtube.com/watch?v=VhwZ9t2b3Zk;License: Standard Youtube License