Question 1. A friend comes to you with the following plight: "I'm confused. An asset is something positive, and it is increased with a debit. However, an expense is something negative and it is increased with a debit. I don't get it." How can you straighten out your friend?
Question 2. Which of the following steps in the accounting cycle requires the most thought and judgment by the accountant: (a) preparing a trial balance, (b) posting adjusting, and closing entries, or (c) analyzing and recording transactions? Explain your answer.
Question 3. York Inc. manufactures notebook computers and has experienced noticeable declines in the purchase price of many of the components it uses, including computer chips. Which inventory costing method should York use if it wants to maximize net income? Explain your answer.