U01A1 Accounting Essay

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Accounting Overview Week 1 U01A1 Financial Accounting Assignment U01A1 Questions 1-14 1. What is the primary objective of financial reporting for external users? The primary objective of financial reporting for external users is to provide useful information for decision making for primarily investors and various external parties in making sound financial decisions in review of provided useful economic information. 2. Define the following: a. Assets – property owned by a person or company having value and available to alleviate debts, commitments or legacies b. Current asset- an asset that is easily convertible to cash c. Liability- a responsible debt or financial obligation legally attached to an individual or organization d. Current liability – obligations that are settled by current assets that are settled within a fiscal year or operating cycle. e. Contributed capital- Capital contributed through the purchase of stock to a corporation or property an owner or shareholder places into an organization in return of a equity position f. Retained earnings- Saved portion of net income that is not returned to investors usually retained once the shareholders receive a portion of their profits 3. Explain what the following accounting terms means: a. Separate-entity assumption – stated information that the corporation, its stakeholders, and its shareholders are separate entities b. Unit-of-measurement assumption- reported financial results by business entity accounts in terms of national/standard monetary unit throughout c. Continuity assumption – can be called going-concern assumption, basic statement that the corporation will pursue its objectives for the foreseeable future without being liquidated d. Historical cost principle - (cost principle) presented cost of an asset based on new history of value. Per the date of

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