Chapter 1:
Exercise 1.2, page 32
Explain why each of the following individual organizations would be interested in financial information about the company:
California Public Employees Retirement System: They would be interested in the Boeing’s financial to become a trustee of the company’s annual retirement contributions to the Pension Fund and find out the amount that Boeing would contribute.
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China airlines: A rival of Boeing company, would see the amount of sales of Boeing to project and compare with their sales.
Henry James: As a real estate investor, he would be interested in estimating the wealth of neighborhoods of Boeing workers. Increased sales would mean that employees would be looking for housing.
Boeing’s management: The financials would allow the company management to identify whether the company would be gaining or losing money. They would know areas of improvement and areas they could make investments.
International Aerospace Machinists: As a labor union, they would be interested in sales in financial statements to have a bargaining edge in wage negotiations. The union would also be interested in ensuring that there is a fair compensation for the employees.
Exercise 1.7, page 33
Match the terms on the left with the descriptions on the right.
Financial Accounting: (i). The area of accounting that refers to provide information to support external investment and credit decisions.
Management accounting (h). The area of accounting that refers to providing information to support internal Management decisions.
Financial Reporting (b). A broad term that describes all information provided to external users, including but not limited to financial statement.
Financial statements (f). Statement of financial position (Balance Sheet) Income statement, Statement of cash flow.
General-purpose assumption: (g). The fact that the same information is provided to various external users, including investors and creditors.
Integrity : (c). An important quality of accounting information that allows investor, creditors, Management and other users to rely on information
Internal Control: (e). Procedures and process with in the organization that insure integrity of accounting information.
Public accounting : (d). The segment of accounting profession that relates to provide audit, Tax and consultancy services to clients.
Book Keeping (a). The procedural aspects of accounting that involves keeping detailed record of business transaction, much of which is done today on computer.
