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ADM1340 EXAM WITH VERIFIED SOLUTIONS
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ADM1340 EXAM WITH VERIFIED SOLUTIONS...
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ADM1340 EXAM WITHVERIFIED SOLUTIONS
Accounting - Answer is the information system that identifies and records the economic
events of an organization, and then communicates them to a wide variety of interested
users.
External Users - Answer -plan, organize, run companies
-directors, marketing managers
external users - Answer investors
lenders
creditors
ethical behaviour - Answer For accounting information to have value, preparers must
have high ethical standards:
- Actions are legal and responsible
- Consider organization's interests
Proprietorships - Answer -one person
-simple to run
-owner has control
-unlimited liability
partnership - Answer -partner contribute
-profits shared
-unlimited liability
corporations - Answer -own entity
-indefinte life
-limited liability
-public/private
Public corporation - Answer financial statements show to investors, lenders other
creditors
, Private Corporation - Answer issue shares but not to general public
how to finance business operations - Answer -borrow money(debt financing)
-sell or repurchase shares
forms of debt - Answer -bank indebtedness
-bank loan
non current debt (mortgage)
investing activity - Answer purchase or sell longterm investment
purchase long lived asset such as property plant or equipment
operating activity - Answer day to day activities;
-revenue
-expense
-related accounts
Income Statement - Answer An income statement reports revenues and expenses to
show how successfully a company performed during a period of time.
Statement of changes in equity - Answer A statement of changes in equity shows the
changes in each component of shareholders' equity, as well as total equity, during a
period of time.
statement of financial position - Answer Balance Sheet]: A statement of financial
position presents a picture of what a company owns (its assets), what it owns (its
liabilities), and its net worth (its shareholders' equity) at a specific point in time.
Statement of Cash Flow - Answer shows where a company obtained cash during a
period of time and how that cash was used.
Balance Sheet(Statement of F.Position) - Answer Assets = Liabilities + Shareholders'
Equity
Statement of Cashflow - Answer Reports the effect on cash of the company's: o
Operating activities
o Investing activities
o Financing activities
Shows net increase or decrease in cash for the period
Relationships between statement - Answer -profit from income statement shown in
statement of changes in equity
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