Question 1: What is the difference between a cost and an expense? When does a cost become an expense? Do all costs become expenses? Explain.
Question 2: Why are adjusting entries necessary in an accrual accounting system? What are some common examples?
Question 3: Describe the difference between temporary and permanent accounts, and state which ones are closed. Describe the purpose of the closing process.
Question 4: What is meant by the "fraud triangle"?
Question 5: Indicate how each of the following transactions affect assets by entering + for increase, - for decrease, or NA if total assets are not affected. _______ 1) Issued stock to investors._______ 2) Borrowed cash from the bank._______ 3) Provided services for cash._______ 4) Purchased land for cash._______ 5) Paid operating expenses._______ 6) Paid cash dividend to the stockholders._______ 7) Repaid the bank loan.