Accounting 251- Exam 1 UPDATED ACTUAL Questions and
CORRECT Answers
The goal of finacial accounting is to measure and communicate economic events to interest external users.
Measure Means accountants identify the events of the company relevant to the business
and record
them appropriately.
Operating activities Include transactions that relate to the primary operations of the company,
such as providing products and services to customers and the associated costs of
doing so, like
rent, salaries, utilities, taxes, and advertising
Investing activities Include transactions involving the purchase and sale of resources that are
expected to benefit the company for several years, such as the purchase of
equipment. With the
necessary resources in place, the company is ready to begin operations
Financing activities Include transactions the company has with investors and creditors, such as
issuing stock and borrowing money from a local bank
Investors give money (invest) into the company in hopes of gaining a future return
Creditor lends funds to a company expecting to be repaid at a later date
Accounting Standards Board, or FASB and the Securities play a primary role as the standard setting bodies for accounting in the U.S. and
and Exchange Commission, they created the Generally Accepted Accounting Principles.
or SEC does what
For Global standards the International Accounting Standards Board (IASB) sets
standards know and International Financial Reporting Standards or IFRS
Sole Proprietorship This form of business is owned by one person. There is not legal separation
between the business and the individual. The owner is personally responsible for
all decisions (including any debts of the business)
Partnership This form of business is owned by two or more persons. Again there is no legal
separation
between the owners and the business, like a proprietorship except more owners.
Corporation This form of business can be owned by any number of owners, the key difference
is this is
legally separate from the owners. In other words, the owners are not liable for the
company's decisions
(of course, unless said owners commit a criminal act such as fraud)
CORRECT Answers
The goal of finacial accounting is to measure and communicate economic events to interest external users.
Measure Means accountants identify the events of the company relevant to the business
and record
them appropriately.
Operating activities Include transactions that relate to the primary operations of the company,
such as providing products and services to customers and the associated costs of
doing so, like
rent, salaries, utilities, taxes, and advertising
Investing activities Include transactions involving the purchase and sale of resources that are
expected to benefit the company for several years, such as the purchase of
equipment. With the
necessary resources in place, the company is ready to begin operations
Financing activities Include transactions the company has with investors and creditors, such as
issuing stock and borrowing money from a local bank
Investors give money (invest) into the company in hopes of gaining a future return
Creditor lends funds to a company expecting to be repaid at a later date
Accounting Standards Board, or FASB and the Securities play a primary role as the standard setting bodies for accounting in the U.S. and
and Exchange Commission, they created the Generally Accepted Accounting Principles.
or SEC does what
For Global standards the International Accounting Standards Board (IASB) sets
standards know and International Financial Reporting Standards or IFRS
Sole Proprietorship This form of business is owned by one person. There is not legal separation
between the business and the individual. The owner is personally responsible for
all decisions (including any debts of the business)
Partnership This form of business is owned by two or more persons. Again there is no legal
separation
between the owners and the business, like a proprietorship except more owners.
Corporation This form of business can be owned by any number of owners, the key difference
is this is
legally separate from the owners. In other words, the owners are not liable for the
company's decisions
(of course, unless said owners commit a criminal act such as fraud)
