How should I study for the midterm (and final exam!)?
You are likely similar to most students when they study….they do what will help them the least
(highlighting, re-reading). Unfortunately, those strategies test recognition (being able to
recognize information) but not recall (being able to call up information when you need it).
Midterms and exams in accounting test recall….so using your old high school strategies is
useless for study purposes in a university-level accounting course.
According to research, what works well for courses that require recall?
1: Write your own questions and then solve them.
There are three different types of questions you should make up. First, questions about the
concepts (called knowledge questions). This is best done using cue cards (Dollarama sells a
package for $1). While reading the module, write questions on one side of the card and the
solution on the other.
Can you give me an example?
Sure. From Module 1 an appropriate card would have the following:
Question: What is a business?
Solution: Making, buying, or selling goods or providing services for money.
Once you have all your cards set up for the module you don't need to review your module any
more…you do that automatically when you go through the cards!
OK, concept questions I understand. What's the second type of question I should
make up?
Second, questions that apply the concepts (called application questions). This is where you
have to apply a concept and calculate something.
Can you give me an example?
OK. From Module 1, the first Check your understanding question asked you what business
sector a fashion designer is in and why it belongs in that sector. Knowing the three business
sectors is a knowledge question BUT being able to apply that concept to figure out which
businesses are in which sectors is an application of knowledge. These types of questions are
what make up many of the end of module Practice Questions.
To make up these questions go to the end of module Practice Questions. Using those as
inspiration make up new questions (with new scenarios, new numbers). Then write a solution.
Application questions take more time to make up than knowledge questions (after all,
knowledge questions come right from the module!) but they have high value for recall
purposes.
KEY for application questions: solve them without looking at the module information. If you
are solving application questions with your textbook and notes open beside you, then you have
now made them recognition questions…and you lost the value of writing the questions for
recall!!
OK, knowledge and application questions I understand. What's the third type of
question I should make up?
Questions that analyze the results of the application questions (called analysis questions).
These take the results of the application questions and try and figure out what they mean.
Can you give me an example?
There are a lot of examples in the Practice Questions at the end of every module but let's just
make one up here so you get a good idea of what you are looking for in the Practice Questions.
Say you just completed the financial statements for a business (that would be an application
question, by the way!) Analysis questions using those financial statements would be as follows:
What is the business’s financial position? (You need to know that financial position is shown by
the balance sheet and then you would need to be able to analyze what is happening on the
balance sheet.)
Is the business profitable? What, if anything, could the business do to become more profitable
if it is unable to increase sales? (You need to know that profitability comes from the income
statement and be able to review the operating expenses so you can determine where you can
cut costs.)
What are the company’s main sources (inflows) of cash? Does this make sense considering the
industry it is in? (You need to know that cash flows are only shown on the statement of cash
flows and then which activities have the greatest inflow. Also, which activities SHOULD have
inflow, and for which activities would it make more sense to see an outflow instead of an
inflow.)
There are a lot of analysis questions included in the Practice Questions at the end of each
module. When you are making up the application questions, develop the analysis questions at
the same time. Then solve them.
OK, this sounds like A LOT of work!!! What else does research show works well
for recall?
2: Regularly (disbursed practice) solve mixed up (interweaving) NEW questions with no aids
(don’t look at the module or your notes!)
Disbursed practice means that you have to write questions regularly….NOT one or two practice
sessions 2 to 3 days before the midterm and final exam. Massed practice (cramming is what
you call it) is useless for recall. That's because, when you group all your practice into a short
period of time, you are testing recognition, NOT RECALL! So practise every night for a period of
time…not cramming for one or two nights right before the midterm or exam. The same
NUMBER OF MINUTES of practice when it is disbursed gets better midterm results than
cramming. Makes sense…our memories work best when they are tested after a short time of
forgetting. Disbursed practice (dividing practice over time) allows a short forgetting time so
you can better practise your recall.
Interweaving means you mix up what you are studying. Most students will do all of the
Module 1 questions first. The feel like they "get it" by the end of doing all the Module 1
questions so they move on to Module 2…and never touch Module 1 again. But, this is the same
as massed practice (see above if you already forgot what that is!). You might FEEL like you got
Module 1 but, really, about halfway through the Module 1 questions you started working on
recognition….not recall.
Write practice questions in a random order. For example, write one question from Module 1,
then one from Module 5, then one from Module 2….mix them up. First, it better tests recall
AND because that is how you will see them on the midterm or final exam!
NO AIDS allowed!! NEVER look at the module or notes when you are writing questions….EVER.
When you can't figure something out read the question again, slowly, and then write down
everything you DO know…and then struggle some more.
Research shows that, in North America, the average time a student struggles with a question is
5.4 minutes before giving up and looking at the solution….which is then testing your
RECOGNITION but not your RECALL!! Compare that to the Philippines (they out-rank North
American students in academic outcomes for both math and science). They work on a question
for approximately 25 minutes before giving up. As a consequence they LEARN more because
learning is a struggle and the more we struggle the more your brain has to work at RECALL!!
Is there anything else I can do to improve the likelihood of passing the midterm?
Yes….work in cooperative groups to do all of the above. Discussing when you understand and
don't understand something helps your brain to remember…and that helps your ability to recall
information later on. Students who work in cooperative groups outperform all other students,
regardless of IQ. We learn best through discussion and particularly discussion with students
who are studying the same thing. Research shows the optimal (best) size group is 3 to 4.
Unfortunately, groups of 2 don't show the same benefits….because groups of 2 often
strengthen misconceptions (misunderstandings) and don't disagree enough (which is good for
learning as long as it's friendly disagreeing). Use the online discussion groups for questions
about specific modules, or the general discussion group for more general course questions.
Ask questions. Your instructors are there for you. If you don't understand something, ASK.
After all, that's what they are there for. Research shows that students who interact with an
instructor outperform all the remaining students in a course. This is likely because they get the
help they need when they need it…instead of struggling on their own.
Being successful in a university course is not like being successful at high school. Many students
found high school easy - they did nothing but highlight, reread, and cram to get good marks.
That's not going to happen in a university accounting course. We expect you to be able to solve
problems…and for that you have to be able to use recall.
So how do I start?
Below are ADDITIONAL practice questions (because students asked for more questions….not
because the end of module questions were not enough, but because students would like
more!) They are all new and you have never seen them before. The solutions are NOT in this
document (removing the temptation to check out the solutions without struggling) and they are
mixed up (interweaving). Start here…and then keep going. Being able to do these questions
without looking at your notes or the modules tells you that you have the ability to recall
information when you need it….and that’s exactly what you need to be able to do for the
midterm. You should also be able to do all the practice questions from the end of every
module (which you should have been doing already!)…and then make up some of your own.
So, here are more questions as requested by students for additional practice. I hope that they
help you to practise the recall you require for the midterm.
The charts included in this package can all be filled out on the computer. However, we
recommend that you print them out anyway, fill them out by hand, then check your answers
with the solutions in a separate document.
Practice Questions - Midterm
PQMR-1
Why is financial information important to stakeholders?
PQMR-2
What does GAAP stand for? Why is GAAP used?
PQMR-3
Using the critical and enhancing questions, analyze the business activities that you had in the
first month of operations. Record the business activities into the basic accounting equation. A
chart is provided for you. Answer the question that follows the chart.
- You invest $7,500 of cash into a business.
- Borrowed $5,000 from your parents to help start the business.
- Using a credit card, registered a business name with Service Ontario, $60.
- You purchase a 1 year general liability insurance policy for $1,200 plus 8% sales tax. You pay
using cash. - You open a business bank account at the local Royal Bank. You will be charged $25 at the
end of every month. The bank account comes with a free Royal Bank VISA business credit card
in your name. - Purchased supplies that will be used in the future for $1,200 plus HST using your credit card.
- Purchased 500 business cards from Staples for $88.50 plus HST using your credit card.
- Produced 500 flyers advertising your business. The cost of the flyers was $0.08 each
including HST. You paid by credit card. - Distributed all of the flyers in the Oakville area.
- Advertise your business on Kijiji, reposting the ad daily to ensure it has a top spot.
- Received cash from customers for services provided, $3,450.
12a. Paid $500 plus HST for a booth at a Support Your Small Business Conference held in
Mississauga.
12b. Used up all of your business cards during the conference. - At the end of the period you had only $175 of supplies left.
- Your cell phone costs $192 (including all taxes). You used your cell phone 75% for business
purposes and pay for that portion out of your business bank account using cash. - Your parents charge you $500 for use of the space for your business plus $90 for the
utilities you used over the month. You pay them in cash. - The bank withdraws the monthly banking fee from your business bank account.
- You have used up one month of your insurance.
- Paid your business credit card at the end of the month.
Additional lines from the chart are available on the next page!
Assets Liabilities Equity
What is the problem with using the basic accounting equation to record all the business
activities?
= +
PQMR-4
An advertising business would be in which business sector? Support your choice with
reasoning. (HINT: whenever you have to support your choice with reasoning, tie your answer
into the definition of the sector you chose.)
PQMR-5
You run a wholesale business, Genoma Inc., selling inventory to small retail stores. During the
month of July, 2016, you have the following transactions. Record each of the transactions into
the expanded accounting equation using account names. The chart has been provided for you.
Answer the questions after completing the chart.
Date Description
July 1 Have opening balances as follows: cash of $7,289, inventory of $4,260, owner's
capital of $8,000, and retained earnings of $3,549.
July 2 Purchased inventory from PJG Inc. for $5,900, terms 2/10, n/30, FOB shipping point.
July 3 The appropriate party paid $130 freight on the purchase.
July 7 Returned $1,000 of inventory to PJG Inc. because it was the wrong model. The
return was shipped FOB shipping point.
July 8 The appropriate party paid $95 freight on the return.
July 9 Sold inventory to Vindi Inc. for $6,800 on account, terms 1/10, n/30. The cost of the
merchandise was $4,400. Shipping terms were FOB destination.
July 10 The appropriate party paid $100 freight on the sale.
July 11 Paid PJG Inc. for the purchase on July 2.
July 13 Some of the inventory sold to Vindi Inc. on July 9, with a sales price of $900 and a
cost of $600, was returned because it was the wrong colour. It was shipped FOB
shipping point and returned to inventory.
July 14 The appropriate party paid $85 freight on the return.
July 17 Purchased inventory from Namboni Inc. for $920 cash, FOB destination.
July 18 The appropriate party paid $25 freight on the purchase.
July 19 Vindi Inc. paid for the sale on July 9.
Continued on the next page!!
July 21 Received a $120 cash refund from Namboni Inc. for damaged inventory that was
returned. It was shipped FOB shipping point.
July 22 The appropriate party paid $15 freight on the return.
July 23 Sold inventory to Hinderling Ltd. for $7,800, terms 3/5, n/15. The cost of the
merchandise was $5,600. Shipping terms were FOB shipping point.
July 24 The appropriate party paid $130 freight on the sale.
July 27 Gave an allowance of $600 to Hinderling Ltd. for inventory that was the wrong
model. They have agreed to keep it so no inventory was returned.
July 28 Hinderling Ltd. paid for the sale on July 23.
You should attempt the chart before completing these questions. You don’t have to print it
out, and you may have more lines than you need. Account names are given, and totals have
been provided so you can check your work. This will not be the case on the exam!
Provide the multiple step income statement to the gross profit line. NOTE: be sure to provide
the appropriate title for this partial income statement!
What was the gross profit ratio for your business, Genoma Inc.? Would you consider this gross
profit margin good? Why or why not?
Why is the gross profit ratio (the percentage) a better measure than gross profit (the dollar
amount) to determine how well the business did for the month?
On July 13 some of the inventory sold to Vindi Inc. on July 9 was returned because it was the
wrong colour. It was shipped FOB shipping point. Who paid for the return shipping costs? If
you paid, which account did you charge the shipping costs to and why? Why do you think the
shipping terms were FOB shipping point instead of FOB destination?
As a purchaser, what shipping terms would you prefer: FOB shipping point or FOB destination?
Why, as a purchaser, do you prefer those shipping terms?
As a seller, what shipping terms would you prefer: FOB shipping point or FOB destination?
Why, as a seller, do you prefer those shipping terms?
Date
Assets Liabilities
Equity
Owner's
Capital Retained earnings
Profit Dividends
Revenue Expenses
Cash
Accounts Receivable
Inventory
Accounts Payable
Owner’s Capital
Retained Earnings
Sales
Sales Returns & Allowances
Sales Discounts
Cost of Goods Sold
Shipping Expenses
Opening 7,289 0 4,260 0 15,000 3,451 0 0 0 0 0
July 1
July 2
July 3
July 7
July 8
July 9
July 10
July 11
July 13
July 14
July 17
July 18
July 19
July 21
July 22
July 23
July 24
July 27
July 28
Totals: 14,197 0 592 0 15,000 3,451 14,600 -1,480 -275 9,400 185
PQMR-6
A student starts a lawn care business for the summer of 2016. Below is the financial data for
the summer as well as a description of what the amounts relate to. Identify the elements that
each item belongs to and then answer the questions which follow.
Description Amount Element
Gas costs (used) $1,152
Money you put in to start the business $2,250
Equipment rental costs $4,200
Scooter purchased (personal) $1,962
Cash in bank (personal) $3,867
Money borrowed from parents to start business. $1,500
Cash in bank (business) $7,680
Cell phone costs (personal) $432
Advertising costs $450
Cell phone costs (business) $648
Customer payments $10,500
Container full of gas $120
Profit is (insert your amount) $
Calculations (show your work):
Which data from the listing would not be included in the business's financial data and why? If
this data was included which assumption would the business be violating? Explain why.
Assets are (insert your amount) $
Liabilities are (insert your amount) $
Equity is (insert your amount) $
The basic accounting equation is ______________________________.
Calculations:
PQMR-7
Why is an accounting system important to external stakeholders? (HINT: define an accounting
system first before you consider why it is important to external stakeholders!)
PQMR-8
Why is it important to review your financial statements regularly, even if you run your own
business?
PQMR-9
You start a business designing websites on October 1, 2015, called Websites NOW. You have
designed a number of websites in the past and think this may be a way to earn some extra cash
during your years at university. You will be using your existing computer equipment so you
don't need to purchase anything but supplies such an ink cartridges and paper. You plan to
attend networking events for entrepreneurs to advertise your services. It is now October 31,
2015, the end of your first month of operations. - You invest $2,500 of cash into the business.
- Borrowed $2,000 from your parents to help start the business. You do not have to pay it
back for 2 years and they are not charging you interest. - You open a business bank account at the local TD Bank®. You will be charged $22 at the end
of every month. The bank account comes with a free (no annual fee) TD Bank Mastercard
business credit card in your name. - Using a credit card, you registered a business name with Service Ontario, $60.
- You purchase a 1 year general liability insurance policy for $600 plus 8% sales tax. You pay
using cash. - Purchased supplies that will be used in the future for $400 plus HST using your credit card.
- Purchased 3,000 business cards from Staples for $200 plus HST using your credit card.
- Produced 2,000 flyers advertising your business. The cost of the flyers was $0.05 each plus
HST. You pay using your credit card. - Register for the Toronto Entrepreneurs Conference, Standard Exhibitor, $600, plus additional
charges for Wireless Internet and Electricity ($50 each). They also charge you HST. The event
will run next month, from November 4th, 2015. You pay with your credit card. - Advertise your business on Kijiji, reposting the ad daily to ensure it has a top spot.
- Distributed one-third of all your flyers and business cards at various government offices
which cater to new businesses. - Design and complete 2 websites for customers. Received cash from customers for services
provided, $2,450. - Design and complete a website for one customer who has not, as yet, paid ($950). You
have sent the customer an invoice and will follow up early next month. - At the end of the period you had $275 of supplies left.
- Your cell phone costs $112 (including all taxes). You used your cell phone 75% for business
purposes and pay for that portion out of your business bank account using cash. - Your parents charge you $250 for use of the space for your business plus $100 for the
utilities and internet access you used over the month. You pay them in cash. - A customer asks you to design her a website with the ability for customers to place orders
on the website. She pays you $500 in advance. You have not, as yet, completed any work. - The bank withdraws the monthly banking fee from your business bank account.
- You have used up one month of your insurance.
- You want to set aside the amount you will need for income taxes so that, when you file
your tax return, you are not caught without the necessary cash. You calculate that you will pay
25% for income tax. - You pay $1,250 towards your credit card but the remainder of the amount is still
outstanding.
Required:
Analyze the business activities using the critical and enhancing questions. Once analyzed,
record the business activities using the expanded accounting equation and account names. A
chart has been provided for you on the next page. You don’t have to print it out, but you may
want to as the font will be small. It’s a large chart!
A question follows the chart.
Trans.
Assets Liabilities
Equity
Retained earnings
Owner's
Capital
Retained Earnings
Profit
Revenue
Expenses
Dividends
Cash
123456789
10
11
12
13
14
15
16
17
18
19
20
21
Totals:
PQMR-9, continued
Create the financial statements (all except the cash flow statement) in good form.
PQMR-9, continued
Review your income statement. Can you use this information to predict how you will do over
the upcoming 11 months? If you were not profitable do you feel that you should quit your
business? Why or why not? Be sure to explain fully!
PQMR-10
What are the critical and enhancing questions? Why are they so important?
Critical Questions Enhancing Questions
Answer:
PQMR-11
What do businesses record in the Sales Returns and Allowances and Sales Discount accounts?
Why do businesses have separate Sales Returns and Allowances as well as Sales Discount
accounts? Why not record all these entries into the Sales account?
PQMR-12
Using the critical and enhancing questions, analyze the business activities that you had in the
first month of operations, as described below. Record the business activities into the expanded
accounting equation. A chart is provided for you. Answer the questions which follow the chart. - You invest $7,500 of cash into a business.
- Borrowed $5,000 from your parents to help start the business.
- You open a business bank account at the local Royal Bank. You will be charged $25 at the
end of every month. The bank account comes with a free Royal Bank VISA business credit card
in your name. - Using a credit card, you registered a business name with Service Ontario, $60.
- You purchase a 1 year general liability insurance policy for $1,200 plus 8% sales tax. You pay
using cash. - Purchased supplies that will be used in the future for $1,200 plus HST using your credit card.
- Purchased 500 business cards from Staples for $88.50 plus HST using your credit card.
- Produced 500 flyers advertising your business. The cost of the flyers was $0.08 each
including HST. You paid by credit card. - Distributed all of the flyers in the Oakville area.
- Advertise your business on Kijiji, reposting the ad daily to ensure it has a top spot.
- Received cash from customers for services provided, $3,450.
12a. Paid cash of $500 plus HST for a booth at a Support Your Small Business Conference held in
Mississauga.
12b. Used up all of your business cards during the conference. - At the end of the period you had only $175 of supplies left.
- Your cell phone costs $192 (including all taxes). You used your cell phone 75% for business
purposes and pay for that portion out of your business bank account using cash. - Your parents charge you $500 for use of the space for your business plus $90 for the
utilities you used over the month. You pay them in cash. - The bank withdraws the monthly banking fee from your business bank account.
- You have used up one month of your insurance.
- Paid your business credit card at the end of the month.
The chart is provided on the next page. You do not have to print it out to fill it in. More lines
have been provided than you will need.
PQMR-12, continued
Assets Liabilities Equity
Owner's
Capital
Retained Earnings
Profit Dividends
Revenue Expenses
+
-
= +
= + + - -
PQMR-12, continued
In what way is the expanded accounting equation better than the basic accounting equation?
What does the expanded accounting equation NOT provide to business owners that they need
for decision-making?
PQMR-13
Name and define the financial statement elements. Why are they so important?
PQMR-14
What does 2/10, n/30 mean if you are selling inventory? Why would you, as a seller, offer
this?
PQMR-15
What is the difference between financial data and financial information?
PQMR-16
Using the below noted listing create ALL of the financial statements for the December 31, 2015
year-end, including the cash flow statement, in good form. The two right-hand columns will
help you organize the accounts.
Account Name Amount Element /
Activity
Financial
Statement
Accounts payable 18,540
Accounts receivable 52,350
Additional cash received from owners 24,000
Bank loan payable, due in 2019 27,000
Business licence 1,080
Cash 54,000
Cash collected from customers 212,220
Cash paid for dividends 26,700
Cash paid for intangible assets 14,340
Cash paid in financing charges (interest) 10,665
Cash paid to suppliers 181,335
Cash received from the bank 27,000
Cash, opening balance 23,820
Dividends 26,700
Income tax expense 13,380
Income tax payable 6,000
Insurance expense 10,800
Interest expense 10,800
Interest payable 135
Owners' capital 48,000
Prepaid insurance 10,800
Rent expense 32,460
Retained earnings 38,235
Salaries expense 85,500
Service revenue 225,000
Supplies 15,750
Supplies expense 20,250
Travel and entertainment expense 17,100
Unearned revenue 2,400
Website design 14,340
Answer the questions which follow the statements.
PQMR-16, continued
Continued on the next page!!
Is the business profitable? What is the profit margin percentage? What are the largest
expenses?
Continued on the next page!!
Review the balance sheet. Is there enough cash to pay off the current liabilities immediately?
Is there anything on the statement that concerns you? Explain why. Is the business debt
financed or equity financed? How do you know? Be sure to show calculations that support
your answer.
Review the cash flow statement. What activity is the main source of cash? Do you consider
this positive or negative? Explain why.
PQMR-17
Below are listed the balances for 4U Consulting Inc. on December 31, 2017. All of the accounts
and items are listed in random order. FIRST, without looking at any of your notes determine if
the description is an account or an activity. If it is an account indicate the element and the subelement if applicable (for example, current or long term liabilities). If it is an activity indicate
what type of activity it is. Use the following short forms: A for assets, L for liabilities, E for
equity, R for revenues, and X for expenses, IS for income statement, RE for statement of
retained earnings, BS for balance sheet, CF for statement of cash flows, O for operating, I for
investing, and F for financing. Remember to indicate for each activity if it is an inflow (+) or an
outflow (-).
Account/Activity Name Amount Element /
Activity
Financial
Statement
Cash payments to suppliers 6,760.97
Unearned revenue 1,450.00
Purchase of intangibles 180.00
Bank charges expense 44.97
Accounts receivable 2,850.00
Cash payments for interest on debt 100.00
Interest payable 50.00
Cash receipts from customers 8,850.00
Cash received from debt 6,000.00
Utilities expense 300.00
Prepaid Insurance 1,782.00
Cash 15,309.03
Loan payable 6,000.00
Income tax expense 2,010.00
Accounts payable 650.52
Capital contributions by owners 7,500.00
Telephone expense 252.00
Insurance expense 162.00
Income tax payable 2,010.00
Interest expense 150.00
Rent expense 750.00
Office supplies 1,028.38
Owner's capital 7,500.00
Office supplies expense 516.58
Business licence 180.00
Service revenue 10,200.00
Prepaid rent 2,525.55
Create the financial statements (all 4 of them) in good form (meaning proper format, headings,
subheadings, totals and subtotals). The next page is available too.
What questions can you answer by using the financial statements that you are not able to
provide when you analyze transactions using the expanded accounting equation?
Continued on the next page!!
Does the current cash position of the business come from the cash you generated from your
operations or another source?
PQMR-18
Provide the flowchart that shows the interconnection between the financial reporting
elements.
PQMR-19
If you are a merchandising business and you purchase inventory with credit terms 3/5, n/20,
what would you want to do and why?
PQMR-20
How does GAAP help turn financial data into financial information?
PQMR-21
Cooper Inc. had total assets and total liabilities at the end of the year of $550,000 and $250,000
respectively. Owner's capital at the end of the year was $180,000. Retained earnings at the
beginning of the year was $96,000. Revenues were $434,000 and expenses were $398,000. In
addition, during the year liabilities increased by $48,000 and owner's capital did not change.
What were the dividends paid during the year? What were assets and liabilities at the beginning
of the year?
Dividends are (insert your amount) $
Assets, beginning of year (insert your amount) $
Liabilities, beginning of year (insert your amount) $
Calculations (show your work):
PQMR-22
Which element does interest which is owed on a loan belong to and why? (Remember to use
the characteristics of the element to support your explanation of why it belongs BUT also be
specific…don't just provide a general definition of the element but a definition that applies to
THIS scenario!)
PQMR-23
Read the following scenario and choose the assumption that you think applies. Indicate if it has
been VIOLATED (not followed) or FOLLOWED. Be sure to explain WHY you think that is true
(which ties into the definition of the assumption)!
A business’s cash balance in its financial statements includes two bank accounts at the local
bank, one related to the business and the other a personal savings account for the major
shareholder.
PQMR-24
Financial information for three independent businesses is given below. Fill in the missing amounts.
Revenues Expenses Profit
Q1 $94,856 $22,489
Q2 $485,126 $986,200
Q3 $475,210 $245,810 $
PQMR-25
Compare and contrast a retailer and a wholesaler. (HINT: To contrast something is to look for
differences but compare is to do the opposite, to look for similarities. So, first list how the two
are similar and then list how they are different.)
PQMR-26
Define the secondary sector and give three examples of businesses that would be included in
this sector.
PQMR-27
Selected data, in random order, are available for DG Company, below. During the year Owner's
Capital did NOT change! Solve for all the unknown amounts.
Total equity, beginning of the year 136,100
Total expenses 567,850
Total equity, end of year ?
Dividends 7,000
Total assets, end of year 309,100
Owner's capital, end of year ?
Total revenues ?
Total liabilities, end of year 151,350
Retained earnings, end of year ?
Profit, during year 28,650
Owner's Capital, beginning of year 75,000
Retained earnings, beginning of the year ?
Assets, beginning of the year 258,500
Liabilities, beginning of the year ?
Calculations (show your work):
PQMR-28
Name two external stakeholders and their main objectives with regards to a business. (HINT:
objectives are represented by what questions stakeholders might ask, given what they want
from a business.)
PQMR-29
What qualities does financial information need in order to make it useful for decision making?
PQMR-30
Solve for the unknown numbers.
Assets Liabilities Equity
$425,600 $128,400
$527,000 $244,000
$298,000 $170,800
PQMR-31
What are financial reporting assumptions and why are they important?
PQMR-32
Which statements are bankers most likely to use and why? (HINT: consider the questions
bankers would want answered.)
PQMR-33
Greene Company doubled their liabilities between the beginning and end of the year. If assets at the
end of the year were $286,400 and equity was $159,500, what are beginning (also called opening)
liabilities?
Opening liabilities are (insert your amount) $
Calculations (show your work):
PQMR-34
Define stakeholders. What is the difference between an internal and external stakeholder?
Sample Solution