Study notes for accounting 101 chapters 1-3, Freshman level

Essay by tacomaranchCollege, UndergraduateA+, January 2006

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1.What is the objective of most business?

To maximize profits.

2.Who are the normally included as the stakeholders of a business?

Owners, employees, managers, customers, creditors and the government.

3.What is the role of accounting in business?

Accounting is an information system that provides reports to stakeholders about the economic activities and conditions of a business.

4. What three sound principles form the foundation for ethical behavior?

Avoid small ethical lapse.

Focus on your long-term reputation

Expect to suffer personal consequences for holding to an ethical position.

5. Distinguish between private accounting and public accounting.

Accountants employed by a business or not for profit are in private accounting.

Accountants who work for a fee are public.

6. Identify what the abbreviations FASB stands for and describe how the FASB sets generally accepted accounting principles.

Financial Accounting Standard Board which set GAAP allows for the comparison of financial performance and conditions across companies.

7. Lynda lyons is the owner of Fast Delivery Service. Recently, Lynda paid interest of $3500 on a personal loan of $60,000 that she used to begin the business. Should Fast Delivery Service Record the interest payment? Explain.

No, the business entity concept limits the accounting date to the directly related activities of the business. A proprietorship would record the activites of the business only.

8. On April 18, Neece Repair service extended an offer of $95000 for land that had been priced for sale at $100,000. On April 25, Neece Repair Service accepted the seller's counteroffer of $97,500. Describe how Neece Repair Service should record the land.

Cost concept is the basis for entering the actual price of the sale, $97,500, into the accounting records for the land.

9. a) Land with an assessed value of $200,000 for property tax purposes is acquired by...