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14 Ques Exam Essay

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14 ques


ques1. multiple chapter 1.

which statement user of accounting incorrect

Chapter 1 shareholder will answer. What they concern
Financial statement will include the users such as managers, investors, creditors, and regulatory agencies. The purpose of looking at the financial statement is to make decision on whether to invest or loan money. Types of corporate available

Proprietorship refer to a single owner. The owners will liable to all business activities and accounting activities such as assets, liabilities, and owners’ equity. Partnership has two or more parties as co-owners, and each owner is a partner. Individuals, corporations, partnership, and other types of entities can be partners. Limited-Liability company is one in which the business is liable to the company’s debts. LLC might have one or more owners, called members. This type of company doesn’t have limited liabilities. Corporation is a business owned by the stockholders, or shareholders, who own stock representing shares of ownership in the corporation.

Type of activities
Three types of accounting activities: financing, investing, and operating activities. Financing activity:
Financing activities are transactions that are involved with financing the company and/or individual customer financing. Any transaction like a loan or anything bought on credit would be this type. Any monies paid on principle or interest paid would be considered a financing activity and would go in that section of the Statement of Cash Flows. Dividends paid to shareholders or the repurchase of stock would also be considered a financing activity. Financing activities involve long-term liabilities, stockholders' equity (or owner's equity) , and changes to short-term borrowings. Financing activities are reported in its own section of the financial statement known as the statement of cash flows (SCF) or cash flow statement.

Examples of financing activities that involve long-term liabilities include the issuance or redemption of bonds. An increase in bonds payable is reported as a positive amount in the financing activities section of the SCF. The positive amount signifies a source of cash, or that cash was provided by issuing additional bonds. A decrease in bonds payable will be reported as a negative amount in the financing activities section of the cash flow statement. A negative amount connotes that cash was used to repurchase or redeem the corporation's bonds.

Examples of financing activities involving stockholders' equity include the issuance of common stock or preferred stock. Increases in these stock accounts will be reported as positive amounts in the financing activities section of the SCF. Positive amounts communicate that cash was provided by issuing more shares of stock—a source of cash. Examples of uses of cash (which are reported as negative amounts) in the financing activities section of the cash flow statement include a corporation's purchase of its own stock, and dividends declared and paid on its stock. (The increase in retained earnings resulting from the corporation's net income is reported in the operating activities section of the SCF.)

Investing activity:
Investing transactions are those that are not part of daily operation of the company and are used solely for investing purposes. Small term investments would be considered obviously, but any loans made to customers or other entities would also be considered an investing transaction. Dividends and interest earned on investments would also qualify under the investing category for Statement of Cash Flows. Purchases of long term investments such as land, equipment or property will also be viewed as an investment. Examples of investing activities include the acquisition (purchase) of long-term investments, equipment used in the business, a building used in the business, and so on. The purchase of these long-term assets is shown as a negative amount in the investing activities section of the SCF, because the acquisition will use (will reduce) cash.

Investing activities also include the sale of long-term investments and the sale of long-term assets that had been used in the business. The proceeds (money received) from the sale of long-term assets will also be reported in the investing activities section of the cash flow statement. The money received will appear as a positive amount, since the effect on cash is positive. The sale is providing or increasing the company's cash.

Operating activity:
Operating activities are...

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