ACCT 2101 EXAM 1 (CH 1-4) COMPLETE
QUESTIONS WITH 100% VERIFIED
ANSWERS
\.Sole Proprietorship - ANSWERS-a business owned by one person. The
business is a separate entity for accounting purposes. However, a
proprietorship is not a separate legal entity from its owner.
\.Partnership - ANSWERS-a business owned by two or more people,
called partners, who are jointly liable for tax and other obligations. Like
a proprietorship, no special legal requirements must be met in starting
a partnership. The only requirement is an agreement between partners
to run a business together. The agreement can be either oral or written
and usually indicates how income and losses are to be shared. A
partnership, like a proprietorship, is not legally separate from its
owners.
\.Corporation - ANSWERS-a business legally separate from its owner or
owners, meaning it is responsible for its own acts and its own debts.
Separate legal status means that a corporation can conduct business
with the rights, duties, and responsibilities of a person. A corporation
acts through its managers, who are its legal agents. Separate legal
status also means that its owners, who are called
,shareholders/stockholders are not personally liable for corporate acts
and debts.
\.Accounting - ANSWERS-a system that identifies, records, and
communicates reliable, relevant, and comparable information to help
users make better decisions
\.Financial Accounting - ANSWERS-provides information primarily to
External users via Financial Statements
aimed at serving external users by providing them with general-purpose
financial statements
governed by concepts and rules known as Generally Accepted
Accounting Principles
\.Generally Accepted Accounting Principles (GAAP) - ANSWERS-aims to
make information relevant, comparable, and reliable
relevant - information affects decisions of users
comparable - information is helpful in contrasting organizations
reliable - information is trusted by users
, \.Securities and Exchange Commission (SEC) - ANSWERS-a government
agency that has the legal authority to establish reporting requirements
and set GAAP for companies that issue stock to the public
oversees proper use of GAAP by companies that raise money from the
public through issuance of stock and debt
\.Financial Accounting Standards Board (FASB) - ANSWERS-private group
that sets both broad and specific accounting principles
\.Measurement Principle / Cost Principle - ANSWERS-accounting
information should be based on actual cost
cost is measured on a cash or equal-to cash basis
\.Revenue Recognition Principle - ANSWERS-provides guidance on when
a company must recognize revenue
revenue is recognized when goods or services are provided to
customers
to recognize means to record it. If revenue is recognized too early, a
company would look more profitable than it is. If revenue is recognized
too late, a company would look less profitable than it is.
QUESTIONS WITH 100% VERIFIED
ANSWERS
\.Sole Proprietorship - ANSWERS-a business owned by one person. The
business is a separate entity for accounting purposes. However, a
proprietorship is not a separate legal entity from its owner.
\.Partnership - ANSWERS-a business owned by two or more people,
called partners, who are jointly liable for tax and other obligations. Like
a proprietorship, no special legal requirements must be met in starting
a partnership. The only requirement is an agreement between partners
to run a business together. The agreement can be either oral or written
and usually indicates how income and losses are to be shared. A
partnership, like a proprietorship, is not legally separate from its
owners.
\.Corporation - ANSWERS-a business legally separate from its owner or
owners, meaning it is responsible for its own acts and its own debts.
Separate legal status means that a corporation can conduct business
with the rights, duties, and responsibilities of a person. A corporation
acts through its managers, who are its legal agents. Separate legal
status also means that its owners, who are called
,shareholders/stockholders are not personally liable for corporate acts
and debts.
\.Accounting - ANSWERS-a system that identifies, records, and
communicates reliable, relevant, and comparable information to help
users make better decisions
\.Financial Accounting - ANSWERS-provides information primarily to
External users via Financial Statements
aimed at serving external users by providing them with general-purpose
financial statements
governed by concepts and rules known as Generally Accepted
Accounting Principles
\.Generally Accepted Accounting Principles (GAAP) - ANSWERS-aims to
make information relevant, comparable, and reliable
relevant - information affects decisions of users
comparable - information is helpful in contrasting organizations
reliable - information is trusted by users
, \.Securities and Exchange Commission (SEC) - ANSWERS-a government
agency that has the legal authority to establish reporting requirements
and set GAAP for companies that issue stock to the public
oversees proper use of GAAP by companies that raise money from the
public through issuance of stock and debt
\.Financial Accounting Standards Board (FASB) - ANSWERS-private group
that sets both broad and specific accounting principles
\.Measurement Principle / Cost Principle - ANSWERS-accounting
information should be based on actual cost
cost is measured on a cash or equal-to cash basis
\.Revenue Recognition Principle - ANSWERS-provides guidance on when
a company must recognize revenue
revenue is recognized when goods or services are provided to
customers
to recognize means to record it. If revenue is recognized too early, a
company would look more profitable than it is. If revenue is recognized
too late, a company would look less profitable than it is.
