Critical Thinking Questions and Exercises

1. Define what accounting is. 2. Explain the role that the FASB plays in the development of financial accounting standards. 3. Why have FASB and IASB been working together to achieve congruence? 4. Identify the key elements of ethical behavior for a professional accountant. 5. Describe what transactions are. 6. Identify the different types of financial statements and explain their purpose. 7. Explain the meaning and usefulness behind the financial equation. 8. If an entity's balance sheet showed total assets of $2,250 and liabilities of $750 on January 31, what would Stockholders' equity be on January 31? 9. Discuss why investors must carefully consider cash flow information in conjunction with accrual accounting results. 10. Describe what a corporation's annual report is and why it is issued