Accounting 201 Exam 1 Questions With
Correct Answers
Sole Proprietorship - CORRECT ANSWER✔✔-business owned by one person
| | | | | | | |
simple to establish
| |
owner controlled
|
tax advantages
|
owner personally liable
| |
financially difficult |
Partnership - CORRECT ANSWER✔✔-2 or more owners
| | | | | | |
simple to establish
| |
shared control
|
broader skills and resources
| | | |
tax advantages
| |
personally liable |
Corporation - CORRECT ANSWER✔✔-separate legal entity owned by stockholders
| | | | | | | | |
easy to transfer ownership
| | |
greater capital raising potential
| | | |
unfavorable tax treatment | | |
, lower legal liabilities for owners
| | | |
Internal Users of Financial Info - CORRECT ANSWER✔✔-Managers
| | | | | | | |
-Finance borrow $ or issue stock?
| | | | |
-Marketing advertising costs | | |
-HR hire or lay off ppl?
| | | | |
-Management expand busi? sell off parts? | | | | |
External Users of Financial Info - CORRECT ANSWER✔✔--Investors who should I
| | | | | | | | | | |
invest in? | |
-Creditors should I loan them $? | | | | | |
-Others regulatory agencies, tax authorities, customers, labor
| | | | | |
Types of Business Activities - Financing - CORRECT ANSWER✔✔-get large sums of
| | | | | | | | | | | |
$ from 2 sources:
| | | |
1. Creditors- borrowing creates liabilities(things the company owes)
| | | | | | |
2. Owners- selling/issuing stock to shareholders(shareholders equity-how much of
| | | | | | | |
a company a stockholder owns)
| | | | |
Types of Business Activities - Investing - CORRECT ANSWER✔✔-obtaining
| | | | | | | | |
resources or assets(things that have value to the company) to operate a business
| | | | | | | | | | | |
e.g. buying and selling land, buildings, equipment, vehicles
| | | | | | |
Types of Business Activities - Operating - CORRECT ANSWER✔✔-primary activities
| | | | | | | | |
of business - normal activities the company performs to run their business
| | | | | | | | | | | |
Correct Answers
Sole Proprietorship - CORRECT ANSWER✔✔-business owned by one person
| | | | | | | |
simple to establish
| |
owner controlled
|
tax advantages
|
owner personally liable
| |
financially difficult |
Partnership - CORRECT ANSWER✔✔-2 or more owners
| | | | | | |
simple to establish
| |
shared control
|
broader skills and resources
| | | |
tax advantages
| |
personally liable |
Corporation - CORRECT ANSWER✔✔-separate legal entity owned by stockholders
| | | | | | | | |
easy to transfer ownership
| | |
greater capital raising potential
| | | |
unfavorable tax treatment | | |
, lower legal liabilities for owners
| | | |
Internal Users of Financial Info - CORRECT ANSWER✔✔-Managers
| | | | | | | |
-Finance borrow $ or issue stock?
| | | | |
-Marketing advertising costs | | |
-HR hire or lay off ppl?
| | | | |
-Management expand busi? sell off parts? | | | | |
External Users of Financial Info - CORRECT ANSWER✔✔--Investors who should I
| | | | | | | | | | |
invest in? | |
-Creditors should I loan them $? | | | | | |
-Others regulatory agencies, tax authorities, customers, labor
| | | | | |
Types of Business Activities - Financing - CORRECT ANSWER✔✔-get large sums of
| | | | | | | | | | | |
$ from 2 sources:
| | | |
1. Creditors- borrowing creates liabilities(things the company owes)
| | | | | | |
2. Owners- selling/issuing stock to shareholders(shareholders equity-how much of
| | | | | | | |
a company a stockholder owns)
| | | | |
Types of Business Activities - Investing - CORRECT ANSWER✔✔-obtaining
| | | | | | | | |
resources or assets(things that have value to the company) to operate a business
| | | | | | | | | | | |
e.g. buying and selling land, buildings, equipment, vehicles
| | | | | | |
Types of Business Activities - Operating - CORRECT ANSWER✔✔-primary activities
| | | | | | | | |
of business - normal activities the company performs to run their business
| | | | | | | | | | | |
