Short Essay Questions 1.Dora Manufacturing, a capital-intensive company that manufactures commercial snow blowers, announced that it is expecting a record loss of $7,000,000 in 2010. However, it...

Short Essay Questions

1.Dora Manufacturing, a capital-intensive company that manufactures commercial snow blowers, announced that it is expecting a record loss of $7,000,000 in 2010. However, it also stated that its business is generating sufficient cash to meet its obligations due in 2010. How can Dora lose $7 million and still generate cash necessary to meet obligations?

2.How does the information presented in an income statement relate to the information reported in a statement of shareholders’ equity?

3.Describe a debit. How does it impact the accounts?

4.How do the concepts of economic events and objectivity relate?

5.Why are ‘expenses paid for in advance’ reported as assets? What happens to this ‘asset’ as time passes?