1.

Because the word profit has more than one meaning,

accountants prefer to use the term net income, which
can be defined precisely from an accounting point of
view.
2. Business enterprises are engaged at all times in
activities aimed at earning income.
3. For example, owners must receive income reports
every year, and the government requires the company
to pay taxes on annual income.
4. Readers of financial reports who are familiar with
these principles can understand how the accountant is
defining net income and will be aware of its strengths
and weaknesses as a measurement.
5. When a business provides a service or delivers a
product to a customer, it usually receives either cash
or a promise to pay cash in the near future.
6. The collection of accounts receivable, which increases
cash and decreases accounts receivable, does not
result in revenue either.
7. Often called the cost of doing business, expenses
include the costs of goods sold, the costs of activities
necessary to carry on the business, and the costs of
attracting and serving customers
8. Withdrawals from the company by the owner
decrease owner's equity, but they are not expenses.
9. . How many years the buildings or equipment will be
in use must of course be an estimate.
10. This creates another problem for the accountant, who
of course does not know how long the business will
last.
11. If accountants have evidence that a company will not
continue, of course, then their procedures must
change.
12. Though direct cause-and-effect relationships can
seldom be demonstrated for certain, many costs
appear to be related to particular revenue.
13. When there is no direct means of connecting cause
and effect, the accountant tries to allocate costs in a
systematic and rational way among the accounting
periods that benefit from the cost.
14. To do so, the accountant must understand and be able
to measure the present value of future cash inflows
and outflows.
15. Once the broad area has been determined, the auditor
can obtain the information for the entity, as discussed
in the last chapter.
16. If the survey is concerned automobiles, should the
auditor not consider what is happening to tires,
batteries, and repairs, as well as to gasoline?
17. The Administrative Agency might in fact already have
a requirement that drivers of state vehicles buy
gasoline from government outlets; nevertheless, as
auditor, Ms. Price asserts that they should have that
requirement.
18. We can easily see now that in further planning for this
case, the auditor can determine what types of
 evidence she would need if she expected to continue
the examination.
19. As long as compliance with the law, regulation, or
other requirement results in more efficient or
economical operations, noncompliance with the
requirement would result in a management audit
report.

Noun clause conjunctions: WH questions, if/whether, that

Adjective clause : who, which, that, when, where, whose,

why, whom,