MUHASEBE I - Deneme Sınavı - 20

Accounting

identifying financial transactions

Manages

Accounting is an information system consisting of identification, recording and communication functions. The functions of accounting are fully expressed in D.

Managers, employees and partners are users of internal accounting information. Government, creditors, investors and customers are users of external information.

The correct answer is B. The basic accounting equation consists of assets = liabilities + owner's equity.

The correct answer is C. Net profit is included in both the balance sheet and income statement. It is the balance sheet showing the entity's assets and resources and the financial statements for a given date. The ability to show revenues and expenses for a certain period belongs to the income statement.

The correct answer is C. Balance sheet reports the assets, liabilities, and owner’s equity of the business at a specific date. İncome statement and cash flow statement cover a specific period. The statement of changes in shareholders' equity includes an accounting period.

Managers are internal information users. There are several types of external users and they can be individuals or organizations outside a company such as investors, creditors, taxing authorities, government, customers, suppliers etc

Accounting Standards are a set of principles companies follow when they prepare and publish their financial statements They provide a systematic, standardized, way of describing the company’s financial performance.

Liabilities are defined as a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow of the entity’s resources. Owner’s equity is the total assets of an entity, minus its total liabilities. This represents the capital theoretically available for distribution to shareholders. Assets, on the other hand,  are economic resources a business owns
and assets will provide future services or benefits. Both I and II are TRUE about owner’s equity.

Contributions by owner are the assets put in the business by the owner. Distributions to owner are withdrawals of cash or other assets by the owner for personal use. Expenses are the cost of assets consumed or services rendered in the process of earning revenue. Revenues are the gross increase in owner’s equity resulting from business activities entered into for the purpose of earning income.  The owner’s equity is also called as residual equity.

Identification of transaction includes analyzing of each transaction in terms of its effect on the items of the accounting equation, identifying the specific items affected and determining the amount of the change in each item.