Discussion Questions

Chapter Opener: Thinking Critically

Can you think of any organizations that would be interested in how Uber is performing?

Managerial Implications: Thinking Critically

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12.To oversee the accounting profession through its investigative, enforcement, and discipline powers.Also charged with establishing auditing auditing standards used by auditors of publicly owned corporations.

SEC, AICPA, AAA.

In response to a wave of corporate accounting scandals at Enron, WorldCom, Adelphia, and Authur Andersen.Managers use financial information to make decisions about adding new products and services, offering current products and services, and choosing vendors.To issue Accounting Standard Updates of the FASB Codification.Note to instructor: These questions are designed to check students’ understanding of new terms, concepts, and procedures presented in the chapter.Advice on how to structure financial affairs in order to reduce taxes without violating tax laws.Owners and managers: evaluate operations. Suppliers: assess ability of a firm to pay debts. Banks: ability to repay loans. Tax authorities: determine a tax base. Governmental agencies: legal

compliance. Employees: wage levels and profit-sharing plans.

Public, managerial, and governmental.Auditing, tax, and management advisory services.Measure business performance; separate entity.Establish accounting policies, direct the accounting system, prepare and interpret financial statements, provide financial advice, prepare tax forms.Regulation of financial reporting by publicly owned corporations.Stockholders, the IRS, SEC, banks, lenders and creditors are all examples of organizations that would be interested in how Uber is performing.Sole proprietorship (owned by one person). Partnership (owned by two or more people). Corporation (can be owned by one person or many).Chapter 1

ACCOUNTING: THE LANGUAGE OF BUSINESS

© 2021 McGraw-Hill Education. This is proprietary material soley for instructor use. Not authorized for sale or distribution in any manner.1-1 College Accounting A Contemporary Approach, 5e David Haddock, John Price, Michael Farina (Solutions Manual All Chapters, 100% Original Verified, A+ Grade) All Chapters Solutions Manual Supplement files download link at the end of this file. 1 / 4

• The certified bookkeeper designation assures an individual possesses the level of

knowledge and skills needed to carry out all key functions through the adjusted trial balance, including payroll.

14. To become a certified bookkeeper you must meet three requirements:

• Pass the four-part national certification exam (adjustments and error

correction; payroll and depreciation; inventory; and, internal control and fraud prevention.II. Sign a Code of Ethics.III. Meet a full-time or part-time experence requirement.

• A limited liability company (LLC) combines the best features of a

partnership with those of a corporation even though, from a legal prespective, it is neither. While offering its owners the limited liability of a corporation, an LLC with more than one owner generally is treaded as a partnership for tax purposes. The limited liability extends to all the LLC's owners. So, the LLC is similar to a limited partnership with no general partners. Unlike an S Corporation, an LLC may have an unlimited number of owners who can be most any type of entity. Under special IRS regulations, an LLC may elect to be taxed as a corporation or as a partnership.

• Internal control is defined as the company's policies and procedures

to safeguard assets, ensure reliability of accounting data, and promote compliance with management policies and applicable laws.

• Fraud is the intentional or reckless acts that result in the confiscation

of a firm's assets or the misrepresentation of the firm's accounting data.

• The goal of internal control is fraud prevention.
• Two common internal control and fraud prevention procedures are policies

and procedures that require writen proof that transactions and payments are authorized and separating duties among employees.

• Mistakes and errors in recording accounting transactions are not considered

fraud unless they are intentional or reckless. 2 / 4

CRITICAL THINKING PROBLEM

Students answers will vary. The student's reason for chooosing one form of ownership over another are more important than the specific choice made. Generate a discussion on the proposed name of business. As the students if they think the name is creative.

Sole Proprietorship:

Advantages: You would be your own boss and could direct the business as you want.Disadvantage: You would be responsible for the debt and taxes of the business and may be limited in the amount of capital you could borrow to finance the business.

Partnership:

Advantage: You would have one or more partners to assist with business operations and to contribute capital.Disadvantage: You would have to share control of the business, as well as its profits.You could be held liable for the debts of the partnership

Limited Liability Partnership:

Advantages: Same as Partnership above plus limited liability of limited partners.Disadvantages: Same as Partnership above plus there must be at least one general partner.

Limited Liability Company:

Advantages: Same as a Corporation or Limited Liability Partnership above plus the ability to elect to be taxed either as a partnership or corporation.

Disadvantages: Same as Corporation above.

Corporation:

Advantages: The business would be a separate entity. Capital would be easier to raise and lliability would be limited to the assets of the business. Corporations also have an unlimited life.Disadvantages: A corporation is a more complicated form of ownership and is usually more expensive to form. There is also more government regulation and consequently, more paperwork with a corporation. A major disadvantage is double taxation; once by corporation and again by shareholders on any corporate distributions (dividends). 3 / 4

CRITICAL THINKING PROBLEM (continued):

S Corporation:

Advantages: Same as Corporation except that the shareholders have limited liability and the corporation pays no tax. There is no double taxation.Disadvantages: Same as corporation except there is no double taxation.

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