test bank for Fundamental Accounting Principles Volume 1 18th Edition by Kermit D. Larson
Larson18ceV1_SM_AppendixII_FINAL.doc
Larson18ceV1_SM_AppendixI_FINAL.doc
Larson18ceV1_SM_CH01_FINAL.doc
Larson18ceV1_SM_CH02_FINAL_rev.doc
Larson18ceV1_SM_CH03_FINAL.doc
Larson18ceV1_SM_CH04_FINAL.doc
Larson18ceV1_SM_CH05_FINAL.doc
Larson18ceV1_SM_CH06_FINAL.doc
Larson18ceV1_SM_CH07_FINAL.doc
Larson18ceV1_SM_CH08_FINAL.doc
Larson18ceV1_SM_CH09_FINAL.doc
Larson18ce_IM_AppI.docx
Larson18ce_IM_AppII.docx
Larson18ce_IM_Ch01.docx
Larson18ce_IM_Ch02.docx
Larson18ce_IM_Ch03.docx
Larson18ce_IM_Ch04.docx
Larson18ce_IM_Ch05.docx
Larson18ce_IM_Ch06.docx
Larson18ce_IM_Ch07.docx
Larson18ce_IM_Ch08.docx
Larson18ce_IM_Ch09.docx
Concept Review Questions
1. Accounting will provide Molly Burke (MB) useful information to make good decisions. For instance, it is important for Molly Burke to track MB revenues and expenses to determine whether business is profitable (MB revenues are exceeding MB expenses). Based on the accounting information, Molly Burke can make decisions on how to price creative production activities where MB can decrease expenses to improve profits. Accounting will provide Molly Burke important information on MB business’ performance to make informed decisions on existing and planned activities strategy.
2. Businesses offering products include Spin Master Corp., Lululemon, NIKE, and Reebok which produce apparel; Dell, Hewlett-Packard, and Apple which produce computer equipment; and Abercrombie and Fitch, GAP, and Zara which produce clothing. Service business examples include: WestJet Airlines which provides airline services; Bell Canada, Rogers Communications, and Telus provide information communication services; and Google, X, Zoom, Facebook and Instagram which provide internet services.
3. “Accounting is relevant to all students even if they do not plan on becoming an accountant. If you are pursuing a career in marketing, you will need to understand information such as sales volume, advertising costs, promotion costs, salaries of sales personnel, and sales commissions. If you are studying human resources, you will need to understand the financial position of your company to determine whether you have the resources to hire new employees or provide existing employees a pay increase. Even if you do not pursue a career in business, understanding the basics of accounting can help you better understand your own personal finances and the world around us. I am convinced that this course will be a good investment of our time.”
4. Answers will vary on what students would sell. Business organizations can be organized in one of three forms: sole proprietorship, partnership, or corporation. These forms have implications for legal liability, taxation, continuity, number of owners, and legal status as follows:
Sole Proprietorship Partnership Corporation
Legal entity no no yes
Limited liability no no yes
Unlimited life no no yes
Business income taxed no no yes
One owner allowed yes no yes
Answers and reasons will vary for the best form of business. Possible answers include: A sole proprietorship would be easiest to form for a student. A partnership would be helpful in bringing people with multiple skills and/or resources together. A corporation would be the easiest to obtain financing and to limit liability.
5. The equity section of the balance sheet reports a Hailey Walker, Capital account. The presence of the owner’s capital account indicates that Organico has been organized as a sole proprietorship.
