1 What is Accounting?2 What is the difference between financial and managerial accounting? Describe the users of the information for each.3 Describe the governing bodies over GAAP.4 What two characteristics are important for accounting information to be useful? Describe how they can be enhanced.5 Describe the four assumptions of GAAP.6 Describe the four principles of GAAP.7 Provide the accounting equation. Briefly explain each of the three parts.8 What are two ways that equity increase? What are the two ways that equity decreases?9 How is net income calculated? Define revenues and expenses.10 On June 25, Ritts Roofing extended an offer of $250,000 for land that had been priced for sale at $300,000. On July 9, Ritts accepted the sellers counteroffer of $275,000. On October 1, the land was assessed at a value of $280,000 for property tax purposes. On December 22, Ritts was offered $305,000 for the land by a national retail chain. At what value should the land be recorded in Ritts Roofings records?11

Interstate Delivery Service is owned and operated by Katie Wyer. The following selected transactions were completed by Interstate Delivery during May:

1. Received cash in exchange for common stock, $18,000. 2. Paid advertising expense, $4,850. 3. Purchased supplies on account, $2,100. 4. Billed customers for delivery services on account, $14,700. 5. Received cash from customers on account, $8,200.

Indicate the effect of each transaction on the following accounting equation elements: Assets, Liabilities, and Equity. To illustrate, the answer to (1) follows:

Assets = Liabilities + Equity +18,000 +18,000