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a) External users of financial information for Sams world, Inc. would include:

1. Owners
2. Investment Advisors employed by a consulting firm
3. Employees
4. Management

____ b) Accounting systems include all the following elements, except:

1. Order
2. Rules
3. Controls
4. Framework

2.

_____ a. T or F: Assume you own more than one business. The financial records are prepared separately for each business. The records are also separate and distinct from your personal finances. This methodology relies on the going concern concept. (If false, identify error and correct.)

______b. T or F The cash basis method of accounting requires revenue to be recognized when performance obligations are satisfied. (If false, identify error and correct.)

_____3. The following data relate to Shelley Company for the year ended December 31, 2019. The company uses the accrual basis method of accounting. (Show work for partial credit)

Sales on credit	$750,000
Cost of inventory sold on credit	528,000
Collections from customers	675,000
Purchase of inventory on credit	322,000
Payment for purchases	275,000
Selling expenses (accrual basis)	50,000
Payment for selling expenses	45,000

Compute net income using accrual basis and select response below:

a. $205,000

b. $172,000

c. $355,000

d. $527,000

Compute net income using cash basis and insert here: ______________

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