ACC 231 EXAM 1 ASU LATEST
WOLFE
Business - ANSWERS-a legal entity that exchanges a product (either a
good or service) for money or something that can be turned into money
Sole Proprietorship - ANSWERS-no seperation between owner and
business (they are the same) and the owner has to pay the debts of the
company
Pros/Cons of Sole Proprietorship/Partnership - ANSWERS-Pros:
Taxed once
Easy to set up
Cons:
Owner is personally liable for the business' debts
Can't transfer ownership
Partnership - ANSWERS-no seperation between owner and business,
but has multiple owners who pay the debts of the company
Corporation - ANSWERS-a seperate legal entity from the owners for
legal and tax purposes (Corp. or Inc.)
END OF
PAGE
1
, ACC 231 EXAM 1 ASU LATEST
WOLFE
Pros/Cons of Corporations - ANSWERS-Pros:
Owners' assests are seperate from the corporation's assets (they buy
stock in the company and their investment is the most they can lose)
Easy to transfer ownership (through selling stock)
Cons:
Taxed twice (taxed at corp. level and when dividends are distributed)
More difficult to set up
U.S. GAAP (Generally Accepted Accounting Principles) - ANSWERS--
Set of rules/principles created by the U.S. Financial Accounting
Standards Board (FASB)
-Public companies must follow these when accounting for transactions
-Ex. Business Entity Principle, Reliability Principle, Cost Principle
U.S. Financial Accounting Standards Board (FASB) goal - ANSWERS-
attempts to ensure that accounting information is understandable,
relevant and reliable
END OF
PAGE
2
WOLFE
Business - ANSWERS-a legal entity that exchanges a product (either a
good or service) for money or something that can be turned into money
Sole Proprietorship - ANSWERS-no seperation between owner and
business (they are the same) and the owner has to pay the debts of the
company
Pros/Cons of Sole Proprietorship/Partnership - ANSWERS-Pros:
Taxed once
Easy to set up
Cons:
Owner is personally liable for the business' debts
Can't transfer ownership
Partnership - ANSWERS-no seperation between owner and business,
but has multiple owners who pay the debts of the company
Corporation - ANSWERS-a seperate legal entity from the owners for
legal and tax purposes (Corp. or Inc.)
END OF
PAGE
1
, ACC 231 EXAM 1 ASU LATEST
WOLFE
Pros/Cons of Corporations - ANSWERS-Pros:
Owners' assests are seperate from the corporation's assets (they buy
stock in the company and their investment is the most they can lose)
Easy to transfer ownership (through selling stock)
Cons:
Taxed twice (taxed at corp. level and when dividends are distributed)
More difficult to set up
U.S. GAAP (Generally Accepted Accounting Principles) - ANSWERS--
Set of rules/principles created by the U.S. Financial Accounting
Standards Board (FASB)
-Public companies must follow these when accounting for transactions
-Ex. Business Entity Principle, Reliability Principle, Cost Principle
U.S. Financial Accounting Standards Board (FASB) goal - ANSWERS-
attempts to ensure that accounting information is understandable,
relevant and reliable
END OF
PAGE
2
