Assignment: Financial Accounting

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:

o Gross sales: $225,000
o Current assets: 40,000
o Long-term assets: 100,000
o Current liabilities: 16,000
o Long-term liabilities: 44,000
o Owners' equity: 80,000
o Net income: 7,200

• Using Dasar's financial statements, compute the following ratios:

o Current ratio
o Debt-to-equity ratio
o 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?