Question 1. What is the financial objective of financial reporting of external users?
Question 2. For accounting purposes, what is an account? Explain why accounts are used in an accounting system.
Question 3. Define a business transaction in the broad sense, and give an example of two different kinds of transactions.
Question 4. Briefly explain what is meant by transaction analysis. What are the two steps in transaction analysis?
Question 5. What two accounting equalities must be maintained in transaction analysis?
Question 6. How is the current ratio computed and interpreted?
Question 7. What transactions are classified as investing activities in an statement of cash flows? What transactions are classified as financing activities.