Objectives

  • 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

Assignment Overview

This assignment presents questions about financial accounting and financial statements.

Deliverables

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?

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