BF1101- Principles of Financial Accounting Aston Business School Tutorial No 1- The Purpose of Accounting Question No 1. Identify the users and uses of accounting information Question No 2. Describe the content and purpose of each of the financial statements: statement of financial position, statement of profit and loss and statement of cash flows. Question No 3. Joanie is a new student in the Optometry Depart at Baston University. She has always considered the possibility of setting up her own store to sell eye glasses and provide optometry services in her home town. She wants to know whether it is important for her to take an introductory accounting class. Required: Explain to Joanie the purpose of accounting and of producing accounting information. Question No 4. Explain the accounting standards and the measurement principles. . Question No. 5 a. What are the objectives of financial reporting? b. What are the qualitative characteristics of useful accounting information? C. Discuss the assumptions in financial reporting. True or false section 1. Transactions that can be measured in dollars and cents are recorded in the financial information system. 2. The hiring of a new company president is an economic event recorded by the financial information system. 1
3. Management of a business enterprise is the major external user of information. 4. Accounting communicates financial information about a business enterprise to both internal and external users. 5. Accounting information is used only by external users with a financial interest in a business enterprise. 6. Financial statements are the major means of communicating accounting information to interested parties. 7. Bookkeeping and accounting are one and the same because the bookkeeping function includes the accounting process. 8. The origins of accounting are attributed to Luca Pacioli, a famous mathematician. 9. The State Administration of Taxation in the People's Republic of China is an example of an internal user of accounting information. 10. The German Confederation of Trade Unions is an example of an external user of accounting information. Multiple choice questions 1. Accountants refer to an economic event as a a. purchase b. sale c. transaction d. change in ownership. 2. The accounting process includes each of the following except a. communication b. convergence c. identification. d. recording. 3. Communication of economic events is the part of the accounting process that involves a. identifying economic events. b. quantifying transactions into dollars and cents. c. preparing accounting reports. d. recording and classifying information. 2
4. Which of the following events cannot be quantified into dollars and cents and recorded as an accounting transaction? a. The appointment of a new accounting firm to perform an audit. b. The purchase of a new computer. c. The sale of store equipment. d. Payment of income taxes. 5. Recording of economic events involves a. keeping a systematic, chronological diary of events. b. analyzing reported information. c. explaining the meaning of reported data. d. preparing accounting reports. 6. Which of the following would not be considered an internal user of accounting data for GHI