Question

Question 1 The following is a list of users of accounting information: a) Managers b) Regulators c) Employees d) Shareholders e) Lenders f) Suppliers g) External auditors Instructions Identify the above users as internal (1) or external (E) using the following format: _(a) Managers (b) Regulators (c) External auditors (d) Shareholders (e) Lenders _(f) Suppliers Question 2 Each of the following independent situations represents a violation of accounting principles: circle the principle that is violated. 1. It is now the end of 2021 and Stella Co. is preparing its annual financial statements. The company has been experiencing severe financial difficulties and management anticipates that the company will cease operations in 2022 but this is not disclosed in the financial statements. Going Concern Assumption Reporting Entity concept 2. Fritz Schmitz runs a small business. All receipts from the business are deposited into Fritz's personal bank account and all Fritz's expenses, both personal and business, are paid out of this same account. Fritz makes no attempt to maintain separate records for the business. Going Concern Assumption Reporting Entity concept Dean has a mining company that is very profitable. Over the past few years, Dean has been very good at maintaining his business records and books. However, Dean's wife has recently been using the company account to pay for her personal expenses. She informed Dean that since he owns the company all the money earned will go to him anyway and therefore using the company account or their personal bank account makes no difference. 3. Going Concern Assumption Reporting Entity concept

Answer 1

Question-1
	Internal(I)	(a) Managers
	External(E )	(b) Regulators
	External(E )	(c ) External auditors
	Internal(I)	(c ) Shareholders
	External(E )	(e ) Lenders
	External(E )	(f ) Suppliers
Question-2
	1. Going concern assumption.		As company are facing financial difficulties and management also anticipates that it will cease to exist in near future. Hence company should report such material fact as Material uncertainity regarding going concern and method of accounting should be changed.
	2. Reporting entity concept		As per the concept of the reporting entity, business is separate from it's owner. Hence, separate records should have been maintained for the same.
	3. Reporting entity concept		As per the concept of the reporting entity, business is separate from it's owner. Hence, separate records should have been maintained for the same.