IUB BUS-A 200 - A200 Final Exam Review (14 pages)

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A200 Final Exam Review



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A200 Final Exam Review

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Pages:
14
School:
Indiana University, Bloomington
Course:
Bus-A 200 - Foundations of Accounting

Unformatted text preview:

A200 Final Exam Review Chapter 1 Formulas Key Concepts Chapter 1 1 2 7 13 29 31 33 36 1 Explain the term stakeholder Distinguish between stakeholders with a direct versus an indirect versus indirect interest in the companies that issue accounting reports Stakeholders are the parties that use accounting information Direct interest owners managers creditors suppliers employees Indirect interest financial analysts brokers attorneys 2 Why is accounting called the language of business Accounting provides information that is useful in making decisions by all participants in the market for resource goods and services 7 What type of return does an investor expect to receive in exchange for providing financial resources to a business What type of return does a creditor expect from providing financial resources to an organization or business investors expect a distribution of the business s profits as a return on their financial investment creditors lend financial resources to businesses and receive interest as a return or profit on their investment 13 What role do assets play in business profitability assets are used to produce earnings 14 To whom do the assets of a business belong assets of a business belong to that business entity and the claims on the assets belong to resource providers 15 What is the nature of creditors claims on assets creditors loan money to the business they have first claim to the assets of the business 16 What term describes creditors claims on the assets of a business liabilities is a term used to describe creditors claims on the assets of a business 17 What is the accounting equation Describe each of its three components ASSETS LIABILITIES STOCKHOLDERS EQUITY 18 Who ultimately bears the risk and collects the rewards associated with operating a business The owners bear the risk and collect the rewards 19 What does a double entry bookkeeping system mean a system in which every transaction affects at least two accounts balance 20 How does acquiring



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