Question 1: What is the accounting equation? Suppose your company prepaid $6,000 in cash for its rent. How does this transaction impact the accounting equation?
Question 2: What are the four basic financial statements? Describe the statement of cash flows, and explain why it is important.
Question 3: What is the Sarbanes-Oxley Act? Why is it important to investors?
Question 4: X Company shows a balance in Land of $100,000 in 2016 and it was $50,000 in 2015. (1.) What is the amount AND percentage change between the two years? (2.) Also, X Company's Total Assets in 2016 are $800,000, what is the common-sized percentage for Land in 2016?
Question 5: Why is capital budgeting important? What is the cash payback period? How is it calculated?
Question 6: What are three different types of decisions that could use incremental analysis?
Question 7: What is the format of an income statement prepared under the contribution margin approach?
Question 8: What is the formula for margin of safety? What does this formula tell a company? Why is this important to know?
Question 9: What is a budget? How does this differ from a long-term plan? Which do you think is more important to do if you can only prepare one of them?
Question 10: What is responsibility accounting? What is a cost center? How does a cost center differ from a profit center?