Essentials of Accounting

Question 1.1. (TCO 1) What is the accounting equation? Suppose your company paid $6,000 in cash for its rent. How does this transaction impact the accounting equation? (Points : 17)

Question 2.2. (TCO 2) What are the four basic financial statements? Describe the statement of cash flows, and explain why it is important. (Points : 17)

Question 3.3. (TCO 3) What is the Sarbanes-Oxley Act? Why is it important to the accounting profession? (Points : 17)

Question 4.4. (TCO 4) How does vertical analysis of financial statements differ from horizontal analysis? Which method do you think is a better analysis tool? (Points : 17)

Question 1.1. (TCO 8) Why is capital budgeting important? What is the net present value method? How do you know whether to accept a project using this method? (Points : 26)

Question 2.2. (TCO 9) What are five different types of decisions that could use incremental analysis? What are the factors to be considered in retaining or replacing equipment? (Points : 26)

Question 3.3. (TCO 10) How is a transfer price determined? Describe the market-based method. Do you think it is better than the cost-based method? (Points : 26)

Question 4.4. (TCO 11) What is manufacturing overhead? Give an example of manufacturing overhead. What is a product cost? (Points : 26)

Question 1.1. (TCO 5) What is the formula for margin of safety? What does this formula tell a company? Why is this important to know? (Points : 26)

Question 2.2. (TCO 6) What is a budget? How does this differ from a long-term plan? Which do you think is more important to do if you can only prepare one of them? (Points : 26)

Question 3.3. (TCO 7) What is a profit center? What is the controllable margin used for? How does a profit center differ from a cost center? (Points : 26)