Question 4 (2 points)

Accounting involves all but which of the following activities?

Question 4 options:

	Measuring and summarizing business activities
	Interpreting financial information
	Communicating the results to management and other decision makers
	Investing profits wisely

What is the purpose of accounting?

Question 6 options:

	To protect customers from being taken advantage of
	To help stakeholders make better business decisions by providing them with financial information
	To provide government with tax information
	To protect business owners from lawsuits

Gloria owns a small business and has kept her own books and financial records in a shoebox. Now her business has grown and she is in trouble. Explain why accurate accounting information and audited financial statements are important to a company. What are the potential consequences for a company if they do NOT have accurate accounting information? Discuss.

Assume that when you started your new business you borrowed $400 from your parents and put in $200 of your own money. Then you earned $300 based on sales and decided to leave the earnings in the business. Create a balance sheet for your company.

Question 18 (2 points)

Each month, Chico's pays employee wages, telephone bills, and salaries to accountants. Which part of the income statement do these represent?

Question 18 options:

	Cost of goods sold
	Gross profit
	Sales allowances
	Operating expenses

Question 19 (2 points)

Which of the following is NOT a section of the income statement?

Question 19 options:

	Cost of goods sold
	Liabilities
	Operating expenses
	Net income or loss

Question 23 (2 points)

What are revenues?

Question 23 options:

	The dollar amount equal to beginning inventory plus net purchase less ending inventory
	The dollar amount earned by a firm from selling goods, providing services, or performing business activities
	All business costs other than the cost of goods sold
	The dollar amount of cash a firm has on hand.

Assume you are the owner of a mid-size electrical contracting company. In what general sorts of situations would you seek short-term financing? In what general sorts of situations would you seek long-term financing? Discuss.