Question 1: Describe the difference between temporary and permanent accounts, and state which ones are closed. Describe the purpose of the closing process.
Question 2: Explain the significance of the return on equity ratio. Who (what category or type of financial statement users) would normally be most interested in this ratio?
Question 3: What is financial leverage? What financial ratio can be increased by using financial leverage?
Question 4: Discuss the major differences between a perpetual inventory system and a periodic inventory system.
Question 5: Why are cash discounts given, and who benefits by these discounts?
Question 6: List the specific steps used in computing the estimated inventory balance using the gross margin method.
Question 7: List the measures that a business can use to achieve strong internal controls.
Question 8: Petty cash funds are maintained on an imprest basis. Explain the advantage of using the imprest basis in accounting for petty cash.
Question 9: Rolla Company was founded in 2010. It acquired $30,000 cash by issuing stock to investors and an additional $20,000 cash by borrowing from creditors. During 2010 it received $15,000 cash revenues and paid $22,000 in cash expenses. The company then went out of business.What amount of cash should Rolla Company have had on hand immediately before going out of business?
Question 10: Why would a merchandising company need good internal controls related to its inventory?
Question 11: Rolla Company was founded in 2010. It acquired $30,000 cash by issuing stock to investors and an additional $20,000 cash by borrowing from creditors. During 2010 it received $15,000 cash revenues and paid $22,000 in cash expenses. The company then went out of business.What amount of cash will Rolla's creditors receive?
Question 12: Rolla Company was founded in 2010. It acquired $30,000 cash by issuing stock to investors and an additional $20,000 cash by borrowing from creditors. During 2010 it received $15,000 cash revenues and paid $22,000 in cash expenses. The company then went out of business.What amount of cash will Rolla's stockholders receive?
Question 13: List the key elements of an internal control system that would apply to inventory, and explain how each of them does relate to inventory.
Question 14: What is the purpose of closing entries?
Question 15: What is the purpose of a journal in accounting?