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DISCUSSION QUESTIONS 1. Define accounting.
Answer: It is a service activity. Its function is to provide quantitative information, primarily financial in nature, about economic entities. 2. Describe accounting as an information system
Answer: Accounting is actually an information system that measures business activities, processes information into reports and communicates the reports to decision makers. 3. What are the three forms of business organizations? Explain each.
Answer: a. Single or sole proprietorship – is a business owned by only an individual called the proprietor. It is the form of business easiest to organize since there are only minimal requirements to follow. b. Partnership – is an association of two or more persons who bind themselves to contribute money, property or industry to a common fund, with the intention of dividing the profits among themselves. c. Corporation – is an artificial being created by operation of law having the rights of succession and the powers and attributes expressly authorized by law or incident to its existence.
4. What are the three types of business as to operation? Describe each.
Answer: a. Service business – this business renders services to customers or clients for a fee. b. Merchandising business or trading – this kind of business buys goods or commodities and sells them at profit. c. Manufacturing business – this type makes finished goods from raw materials or unassembled parts.
5. Explain Generally Accepted Accounting Principles (GAAP). Mention at least five Generally Accepted Accounting Principles and explain each.
Answer: Generally Accepted Accounting Principles encompasses the conventions, rules, procedures, practice and standards followed in the accumulation, preparation and presentation of accounting data in the financial statements.
* Business entity Concept – it is treated as separate and distinct
Answer: It is a service activity. Its function is to provide quantitative information, primarily financial in nature, about economic entities. 2. Describe accounting as an information system
Answer: Accounting is actually an information system that measures business activities, processes information into reports and communicates the reports to decision makers. 3. What are the three forms of business organizations? Explain each.
Answer: a. Single or sole proprietorship – is a business owned by only an individual called the proprietor. It is the form of business easiest to organize since there are only minimal requirements to follow. b. Partnership – is an association of two or more persons who bind themselves to contribute money, property or industry to a common fund, with the intention of dividing the profits among themselves. c. Corporation – is an artificial being created by operation of law having the rights of succession and the powers and attributes expressly authorized by law or incident to its existence.
4. What are the three types of business as to operation? Describe each.
Answer: a. Service business – this business renders services to customers or clients for a fee. b. Merchandising business or trading – this kind of business buys goods or commodities and sells them at profit. c. Manufacturing business – this type makes finished goods from raw materials or unassembled parts.
5. Explain Generally Accepted Accounting Principles (GAAP). Mention at least five Generally Accepted Accounting Principles and explain each.
Answer: Generally Accepted Accounting Principles encompasses the conventions, rules, procedures, practice and standards followed in the accumulation, preparation and presentation of accounting data in the financial statements.
* Business entity Concept – it is treated as separate and distinct