Introducing Financial Accounting - CCSN Computer Graphics Program

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Chapter 1 Introducing Financial Accounting 31
An important responsibility of many accounting professionals is to design and implement internal control
procedures for organizations. Explain the purpose of internal control procedures. Provide two examples of
internal controls applied by companies.
Identify the following users as either external users (E) or internal users (I).
a. Lenders d. Sales staff g. Brokers j. Managers
b. Controllers e. FBI and IRS h. Suppliers k. Business press
c. Shareholders f. Consumer group i. Customers l. District attorney
There are many job opportunities for those with accounting knowledge. Identify at least three main areas
of opportunities for accounting professionals. For each area, identify at least three job possibilities linked
to accounting.
Accounting professionals must sometimes choose between two or more acceptable methods of
accounting for business transactions and events. Explain why these situations can involve difficult
matters of ethical concern.
Identify which accounting principle or assumption best describes each of the following practices:
a. If $51,000 cash is paid to buy land, the land is reported on the buyer’s balance sheet at $51,000.
b. Alissa Kees owns both Sailing Passions and Dockside Supplies. In preparing financial statements for
Dockside Supplies, Kees makes sure that the expense transactions of Sailing Passions are kept separate
from Dockside’s transactions and financial statements.
c. In December 2010, Ace Landscaping received a customer’s order and cash prepayment to install sod
at a new house that would not be ready for installation until March 2011. Ace should record the revenue
from the customer order in March 2011, not in December 2010.
a. Total assets of Caldwell Company equal $40,000 and its equity is $10,000. What is the amount of its
liabilities?
b. Total assets of Waterworld equal $55,000 and its liabilities and equity amounts are equal to each other.
What is the amount of its liabilities? What is the amount of its equity?
Use the accounting equation to compute the missing financial statement amounts (a), (b), and (c).
Company
1
2
3
Assets 5 Liabilities 1 Equity
$ 30,000
$ (a)
$ 20,000
(b)
50,000
30,000
90,000
10,000
(c)
Accounting provides information about an organization’s business transactions and events that both affect
the accounting equation and can be reliably measured. Identify at least two examples of both (a) business
transactions and (b) business events that meet these requirements.
Use Apple’s September 26, 2009, financial statements, in Appendix A near the end of the book, to answer
the following:
a. Identify the dollar amounts of Apple’s 2009 (1) assets, (2) liabilities, and (3) equity.
b. Using Apple’s amounts from part a, verify that Assets 5 Liabilities 1 Equity.
QS 1-2
Explaining internal control
C1
QS 1-3
Identifying accounting users
C2
QS 1-4
Accounting opportunities C2
QS 1-5
Identifying ethical concerns C3
This icon highlights
assignments that enhance
decision-making skills.
QS 1-6
Identifying accounting
principles
C4
QS 1-7
Applying the accounting
equation
A1
QS 1-8
Applying the accounting
equation
A1
QS 1-9
Identifying transactions
and events P1
QS 1-10
Identifying and computing
assets, liabilities, and equity
P1