Response the below:
1. State the "accounting equation" and define each of its terms. What is the logic behind this equation? How is the structure of the balance sheet related to this equation?
2. You have a company's balance sheet, its income statement, and its statement of cash flows. Which would you refer to if you wanted to know if a company made a profit last year? If you wanted to find out whether the firm had any intangible assets? If you wanted to know why its cash balance had changed over the past year? If you wanted to know how much debt the firm had used to finance its assets? If you wanted to know what the firm's operating expenses were for the past year?
3. Identify and describe the basic elements of an income statement. Explain how the accrual basis of accounting guides the way the information on the income statement is reported.
4. What is the purpose of an external audit by an independent CPA firm?
5. What is the purpose of budgeting? What is the master budget, and what are its major Components? How does a top down budgeting process differ from a bottom up approach? And what are the advantages and disadvantages of each?
6. Describe the key differences between financial accounting and managerial accounting.