BUSN-1200-052_16416_202010

FUNDAMENTALS OF BUSINESS

ASSIGNMENT-III

Professor: George Broderick

AAKASH TANWAR

300298449
Q1 Response: The general accounting equation is: Assets = Liabilities + Shareholder’s equity.
This equation is used to balance the entire account of a company. The accounting statement
that, in detail, depicts the information about the three factors in the accounting statement is
called the balance sheet. It basically is a summary of a company’s financial statements in terms
of Assets, liabilities, and owner’s equity. On the other hand, the profit/loss equation is:
Profit/loss = Revenues- expenses. The financial statement that describes a firm’s revenues and
expenses and indicate whether the company is in profit or in a loss is the income statement. A
balance sheet can be made for any point of time whereas an income statement is usually made
for a time period.

Q2 Response: The matching, in the income statement, that the accountant was talking about
might be a reference to the matching principle. According to the matching principle, expenses
must be matched with the corresponding revenues in order to determine the net income
generated/lost in a transaction over a period.

Q3 Response: No, cost of goods sold (COGS) isn’t the same as the total amount you spend on
everything in a business that year. COGS refers to the expenses that are directly incurred in the
production or sales of goods or services in a given time period. There is another entity used to
note other expenses apart from COGS. This is referred to as operating expenses. Operating
expenses and COGS together denote the total amount one must spend on everything in a
business in a year.

Q4 Response: The required examples are as follows:

Tangible Asset: Land, buildings, equipment.

Intangible Asset: Trademarks, patents, copyrights.

Short-term liability: Accounts payable, taxes payable, interest payable.

Q5 Response: Budget is a detailed report on estimated receipts and expenditures for a future
period of time. A company produces and uses one for the purpose of planning, controlling, and
decision-making. At the end of a decided time-period, a company can match its actual financial
performance with the budget to know whether there are problems in the financial performance
that needs to be addressed.