Intro to Business Exercise 7.0

1. What is accounting? Explain.

2. One of the purposes of accounting is to evaluate business performance. Explain what this means and provide a suitable example to illustrate your answer.

3. Janice is the owner of an architectural firm but she has no rudimentary knowledge in accounting (she has an accountant who looks after everything for him). Is this acceptable? Why or why not?

4. Sean needs to borrow $50,000 from the bank to renovate his house. Discuss briefly what information the bank would need from Sean before deciding whether to grant him the loan.

5. What information can you obtain from a Profit and Loss Statement? How can you use this report to assist you in making business decisions (use an example to illustrate)? What is the other name of P&L statement?

6. For the year 2014, Company A has provided you with the following information:

- Sales $146,000- General Expense $17,300- Salary Expenses $32,000- Cost of Goods Sold $55,130- Rental Revenues $7,200- Interest Expense $2,800

Based on the data given above, prepare a 2014 income statement for the company.

7. Besides writing and keeping every receipt dutifully, what else can you do to keep a close eye on the funds (so they don’t go missing) during the charity drive? Suggest TWO (2) solutions.