Session:2 Introduction to Financial Statements

Questions

Principles of Accounting, Volume 1: Financial Accounting | Leadership Development – Micro-Learning Session

Rice University 2020 | Michael Laverty, Colorado State University Global Chris Littel, North Carolina State University| https://openstax.org/details/books/principles-financial-accounting

1. LO 2.1Identify the four financial statements and describe the purpose of each.
2. LO 2.1Define the term stakeholders. Identify two stakeholder groups, and explain how each group might use the information contained in the financial statements.
3. LO 2.1Identify one similarity and one difference between revenues and gains. Why is this distinction important to stakeholders?
4. LO 2.1Identify one similarity and one difference between expenses and losses. Why is this distinction important to stakeholders?
5. LO 2.1Explain the concept of equity, and identify some activities that affect equity of a business.
6. LO 2.2Explain the difference between current and noncurrent assets and liabilities. Why is this distinction important to stakeholders?
7. LO 2.2Identify/discuss one similarity and one difference between tangible and intangible assets.
8. LO 2.2Name the three types of legal business structure. Describe one advantage and one disadvantage of each.
9. LO 2.2What is the “accounting equation”? List two examples of business transactions, and explain how the accounting equation would be impacted by these transactions.
10. LO 2.3Identify the order in which the four financial statements are prepared, and explain how the first three statements are interrelated.
11. LO 2.3Explain how the following items affect equity: revenue, expenses, investments by owners, and distributions to owners.
12. LO 2.3Explain the purpose of the statement of cash flows and why this statement is needed.

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