225) Explain why ethics are an integral part of accounting.
226) Describe the two important guidelines for revenue recognition.
227) Identify the four basic forms of business organizations and their key attributes.
228) Identify and describe the two main groups involved in establishing generally accepted accounting principles.
229) How does the going-concern principle affect reporting asset values of a business?
230) Describe the income statement and the relation between revenues, expenses, and net income or loss.
231) Explain the accounting equation and define its terms.
232) What distinguishes liabilities from equity?
233) What is the purpose of return on assets as an analytical tool?
234) Define risk and return and discuss the relation between them.
235) Describe the three types of activities reported on the statement of cash flows.
236) Identify and describe the four basic financial statements:
237) The characteristics below apply to at least one of the forms of business organization.
a. Is a separate legal entity.
b. Is allowed to be owned by one person only.
c. Owner or owners are personally liable for debts of the business.
d. Is a separately taxable entity.
e. Is a business entity.
f. May have a contract specifying the division of profits among the owners.
g. Has an unlimited life
Use the following format to indicate (with a "yes" or "no") whether or not a characteristic applies to each type of business organization.
| Proprietorship | Partnership | Corporation | LLC | |
| a. | ||||
| b. | ||||
| c. | ||||
| d. | ||||
| e. | ||||
| f. | ||||
| g. |
238) A parcel of land is offered for sale at $600,000, is assessed for tax purposes at $500,000, is recognized by its purchasers as easily being worth $575,000, and is sold for $570,000. At what amount should the land be recorded in the purchaser's books? What accounting principle supports your answer?
239) You are reviewing the accounting records of Buddy's Foreign Automotive, owned by Bruce Jones. You have uncovered the following situations. List the appropriate accounting principle related to each independent scenario and suggest a correct action for each.
1. In August, a check for $500 was written to Community Sports. This amount represents soccer camp for his daughter Cassie.
2. Bruce plans a Going Out of Business Sale for June, since he will be closing the business for a month-long vacation in July. He plans to reopen August 1 and will continue operating Buddy's Foreign Automotive indefinitely.
3. Buddy received a shipment of tools from Ontario, Canada. The invoice was stated in Canadian dollars.
4. Sandy Lane paid $1,500 for a major repair services. The amount was recorded as revenue. The parts for the repair must be ordered from overseas and the service won't be complete until the following month.