There are several types of external users and they can be individuals or organizations outside a company such as investors, creditors, taxing authorities, government, customers, suppliers etc. The primary external users are investors and creditors, because they have a direct financial interest in a business.

Managers are internal information users. The correct answer is C.

In revenue recognition principle, revenue is recorded when it is earned, not when the cash is
received just the same as the accrual basis accounting.

Accounting is an information system which provides financial information about the entity for decision makers. This system includes three kinds of basic activities which are identifying, recording and communicating of the financial transactions of an entity.

1. Transactions Occur
2. Source documents are prepared
3. Transactions are Analyzed
4. Transactions are Journalized and Posted

It describes typical owner’s equity accounts. The owner’s claims to the assets of the business is called owners’ equity. A company has separate accounts for each element of owner’s equity as owner withdrawals, Revenues and expenses.

The correct answer is question E. Income and expense accounts are shown in the income statement. Payables and suppplies are shown in balance sheet. 

In deferred revenue, revenue is recognized after the cash is received. The correct answer is C.

In accrued revenue, revenue is recognized
before the cash is received.

Liabilities are defined as a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow of the entity’s resources. Owner’s equity is the total assets of an entity, minus its total liabilities. This represents the capital theoretically available for distribution to shareholders. Assets, on the other hand,  are economic resources a business owns
and assets will provide future services or benefits. Both I and II are TRUE about owner’s equity.

Non-current assets include the assets acquired to be used in business ‘s operations for more than 12 months and receivables of which due dates are more than 12 months

The monetary unit assumption requires that financial transactions can only be recorded if the transaction data can be expressed in money terms. B is the right answer.

If the accounting period consists of one year and the starting and ending dates are January 1 and December 31, fiscal year will be equal to the calendar year. But that does not mean that it is absolutely necessary.

The correct answer is C.

This section describes typical owner’s equity accounts. The owner’s claims to the assets of the business is called owners’ equity. A company has separate accounts for each element of owner’s equity. Remember the extended version of accounting equation!
• Owner,Capital. Owner’s Capital account represents the net contribution of the owner in the business.
• Owner, Withdrawals. The amounts taken out of the business by the owner appear in a separate account titled Withdrawals, or Drawing.
• Revenues. The company will receive assets (for example, cash) in exchange for goods sold and services rendered. 
• Expenses. Expenses use up assets or create liabilities in the course of operating a business. The cost of operating a business is called expense

Accounts are the basic storage units for accounting data and are used to accumulate amounts from similar financial transactions. So, an account is a summary device of accounting.

The steps in accounting cycles briefly are:
• Opening entries based on opening balance sheet
• Posting opening entries to ledger accounts
• Analyzing and journalizing daily transactions
• Posting daily transactions to accounts
• Preparing monthly trial balances
• Preparing unadjusted trial balance at the end of the period
• Adjusting entries
• Preparing adjusted trial balance
• Preparing financial statements
• Closing entries
• Preparing post-closing trial balance

Revenues are the gross increase in owner’s equity resulting from business activities entered into for the purpose of earning income.

Assets, distributions, and expenses increase by debiting (on left side) and normally show debit balance. The correct answer is C.

In TRApps Co. example, Income Summary account has the credit balance of 1,516.67 TL (7,400- 5,883.33). In other words, transferred revenue totals are higher than transferred expense totals. TRApps Co has the profit! Now, as the company calculated its profit, it is time to close Income Summary account. In this case, because the company has profit, the Income Summary account must be debited for closing. The balance will be transferred to Capital account. If there were loss for the company, then there would be a debit balance. In this case Income Summary account would be credited for closing. Here is the journal entry for TRApps Co. for closing Income Summary account.