1 ACCT1002 Introduction to Financial Accounting UWI Open Campus ACCT 1002 INTRODUCTION TO FINANCIAL ACCOUNTING Worksheet 1 Tutorial Worksheet # 1 Accounting and the Business Environment 1. The primary objective of financial reporting is to provide information useful for making investment and lending decisions. To be useful, financial information must possess certain characteristics. State these characteristics and discuss each. 2. Accountants often refer to GAAP. What does the acronym GAAP means and why is it important in accounting? 3. What does the acronym FASB represent and what role does it play in financial accounting? 4. Suppose you are the sole owner of a bicycle sales and repair shop for many years. Which business type would best protect your personal assets from product liability exposure and why. 5. Suppose you and a friend developed a new technology for home computer systems. However, you both need to raise a large amount of capital to build the production and support facilities to market the product successfully. Explain which of the business type would be best suited to help the company raise the necessary capital to begin production. 6. Bill Rogers has three different businesses. He has only one bank account for transactions relating to all of his various businesses. Which of the concepts or principles of accounting is Bill violating and why? 7. Tate Corporation purchased a building for its grocery store for $30,000 in 1970. Based on inflation estimates, the amount of this asset has been adjusted in the accounting records. The building is now reported at $75,000. Which of the following concepts or principles of accounting is being violated and why?