INTEGRATED ACCOUNTING FINAL EXAM QUESTIONS AND
ANSWERS #10
Characteristics of a Sole Proprietorship - correct answer Single owner-manager, Small
Companies, Most common type of business organization, 72% of companies are this
type of business
Advantages of a Sole Proprietorship - correct answer Easiest to organize and simplest
to operate
Characteristics of a Partnership - correct answer Two or more owners, Partnership
Agreement, 9%
Characteristics of a Corporation - correct answer Stockholders have separate identity
from company, Capital stock, Greatest volume of business, 19%
Advantages to Corporations - correct answer Conduct the greatest volume of business
Disadvantages to Corporations - correct answer Very complex organization and legal
structure,
What are the four sections to a business plan? - correct answer 1) Description of the
Company
2) Marketing Plan
3) Operating Plan
4) Financial Plan
Describe the "Description of the Company" section of the business plan. - correct
answer Basic activities, Organization of company, its product or service, its current and
potential customers, its objectives, where it is located, where it conducts business.
Describe the "Marketing Plan" section of the business plan. - correct answer Shows
how the company will make sales, influence and respond to market conditions
Describe the "Operating Plan" section of the business plan. - correct answer Description
of the relationships between the company, its suppliers, and its customers, description
of how the company will develop, service, protect, and support its products or services.
Describe the "Financial Plan" section of the business plan. - correct answer Identify the
companies capital requirements and sources of capital,describe the company's
projected financial performance.
Assets - correct answer A company's economic resources that it expects will provide
future benefits to the company.
, Contra Assets - correct answer Account that has the effect of reducing the balance in
another account.
Liability - correct answer A company's economic obligations (debts) owed to its
creditors.
Equity - correct answer Claims by creditors and owners against the assets of a
company.
Capital - correct answer Funds a company uses to operate or expand its operations.
Contra Equity - correct answer An owner's or stockholders' equity account with a debit
balance instead of the normal credit balance. Examples include the owner's drawing
account, a dividend account, and the treasury stock account.
Revenues - correct answer Prices charged to a company's customers for the goods or
services that a company provides to them.
Expenses - correct answer Costs a company incurs to provide goods and services to its
customers during an accounting period
What are examples of a Contra Equity? - correct answer Owner's drawing accounting, a
dividend account, and the treasury stock account.
GAAP - correct answer Currently Accepted Accounting Principles, procedures, and
practices that are used for financial accounting in the US.
Matching Concept - correct answer To determine its net income for an accounting
period, a company computes and deducts the total expenses from the total revenues
earned during the period
Historical Cost Principle - correct answer Concept that a company records its
truncations based on the dollars exchanged at the time the transaction occurred.
Entity Concept - correct answer Seperation of accounting records of a company from
the records of the company's owners
Profit Margin - correct answer Net Income / Net Sales
Gross Profit Margin (Percentage) - correct answer Gross Profit / Net Sales
Current Ratio - correct answer Current Assets / Current Liabilities
Accounts Receivable Turnover - correct answer Net Credit Sales / Average Accounts
Receivable
ANSWERS #10
Characteristics of a Sole Proprietorship - correct answer Single owner-manager, Small
Companies, Most common type of business organization, 72% of companies are this
type of business
Advantages of a Sole Proprietorship - correct answer Easiest to organize and simplest
to operate
Characteristics of a Partnership - correct answer Two or more owners, Partnership
Agreement, 9%
Characteristics of a Corporation - correct answer Stockholders have separate identity
from company, Capital stock, Greatest volume of business, 19%
Advantages to Corporations - correct answer Conduct the greatest volume of business
Disadvantages to Corporations - correct answer Very complex organization and legal
structure,
What are the four sections to a business plan? - correct answer 1) Description of the
Company
2) Marketing Plan
3) Operating Plan
4) Financial Plan
Describe the "Description of the Company" section of the business plan. - correct
answer Basic activities, Organization of company, its product or service, its current and
potential customers, its objectives, where it is located, where it conducts business.
Describe the "Marketing Plan" section of the business plan. - correct answer Shows
how the company will make sales, influence and respond to market conditions
Describe the "Operating Plan" section of the business plan. - correct answer Description
of the relationships between the company, its suppliers, and its customers, description
of how the company will develop, service, protect, and support its products or services.
Describe the "Financial Plan" section of the business plan. - correct answer Identify the
companies capital requirements and sources of capital,describe the company's
projected financial performance.
Assets - correct answer A company's economic resources that it expects will provide
future benefits to the company.
, Contra Assets - correct answer Account that has the effect of reducing the balance in
another account.
Liability - correct answer A company's economic obligations (debts) owed to its
creditors.
Equity - correct answer Claims by creditors and owners against the assets of a
company.
Capital - correct answer Funds a company uses to operate or expand its operations.
Contra Equity - correct answer An owner's or stockholders' equity account with a debit
balance instead of the normal credit balance. Examples include the owner's drawing
account, a dividend account, and the treasury stock account.
Revenues - correct answer Prices charged to a company's customers for the goods or
services that a company provides to them.
Expenses - correct answer Costs a company incurs to provide goods and services to its
customers during an accounting period
What are examples of a Contra Equity? - correct answer Owner's drawing accounting, a
dividend account, and the treasury stock account.
GAAP - correct answer Currently Accepted Accounting Principles, procedures, and
practices that are used for financial accounting in the US.
Matching Concept - correct answer To determine its net income for an accounting
period, a company computes and deducts the total expenses from the total revenues
earned during the period
Historical Cost Principle - correct answer Concept that a company records its
truncations based on the dollars exchanged at the time the transaction occurred.
Entity Concept - correct answer Seperation of accounting records of a company from
the records of the company's owners
Profit Margin - correct answer Net Income / Net Sales
Gross Profit Margin (Percentage) - correct answer Gross Profit / Net Sales
Current Ratio - correct answer Current Assets / Current Liabilities
Accounts Receivable Turnover - correct answer Net Credit Sales / Average Accounts
Receivable
