BUS 201: Final Exam| 142 Questions| With
Complete Solutions
Acccounting correct answer: the information system that
identifies, records, and communicates the economic events of an
organization to interested users
Sole Proprietorship correct answer: - simple to establish
- owner controlled
- tax advantages
Partnership correct answer: - simple to establish
- two or more people
- shared control
- broader skills and resources
- tax advantages
Corporation correct answer: - easier to transfer ownership
- easier to raise funds
- no personal liability
- need to file with state
- have rights and set up by laws
- separation between owners
Advantages/Disadvantages for Corporations correct answer: -
Disadvantage: get taxed twice
- Advantage: no personal liability, easier to transfer ownership,
easier to raise funds
,Advantages/Disadvantages for Sole Proprietorship correct
answer: Disadvantage: liable for what happens
Advantage: tax advantages, simple to establish
Internal Users correct answer: managers who plan, organize,
and run a business--marketing managers, production
supervisors, finance directors, and company officers;
MANAGEMENT
External Users correct answer: Investors, creditors, taxing
authorities, customers, labor unions, regulatory agencies:
STAKEHOLDERS
Current Assets correct answer: -assets that a company expects
to convert cash or use up within one year or the operating cycle,
whichever is longer
COMMON TYPES: cash, investments, receivables, inventories,
prepaid expenses
Current Liabilities correct answer: - obligations that the
company is to pay within the next year or operating cycle,
whichever is longer
COMMON TYPES: accounts payable, salaries and wages
payable, notes payable, interest payable, income taxes payable,
ALSO unearned revenue
PP&E correct answer: - long useful lives
- these are seen as assets on the balance sheet
COMMON TYPES: land, buildings, equipment, delivery
vehicles, and furniture
, Accumulated Depreciation correct answer: - total amount of
depreciation expensed thus far in the asset's life
- is seen as a contra asset
- appears just after the account it offsets on the balance sheet
Intangible Assets correct answer: - assets that do not have
physical substance
COMMON TYPES: goodwill, patents, copyrights, and
trademarks
Stockholders' Equity correct answer: - Common Stock:
investments of assets into the business by the stockholders
- Retained Earnings: income retained for use in the business
Accounting Equation correct answer: Assets = Liabilities +
Owner's Equity
Expanded Accounting Equation correct answer: Assets =
Liabilities + Stockholders' Equity
Assets = Liabilities + Cont. Capital + R.E.
Asset = Liab + Cont. Capital + Rev - Exp - Dividends
Asset + Exp + Divid = Cont. Capital + Rev + Liab
Liquidity Ratios correct answer: - measure the short-term
ability to pay maturing obligations and to meet unexpected
needs for cash
Current Ratio= Current Assets
---------------------------------
Current Liabilities
Complete Solutions
Acccounting correct answer: the information system that
identifies, records, and communicates the economic events of an
organization to interested users
Sole Proprietorship correct answer: - simple to establish
- owner controlled
- tax advantages
Partnership correct answer: - simple to establish
- two or more people
- shared control
- broader skills and resources
- tax advantages
Corporation correct answer: - easier to transfer ownership
- easier to raise funds
- no personal liability
- need to file with state
- have rights and set up by laws
- separation between owners
Advantages/Disadvantages for Corporations correct answer: -
Disadvantage: get taxed twice
- Advantage: no personal liability, easier to transfer ownership,
easier to raise funds
,Advantages/Disadvantages for Sole Proprietorship correct
answer: Disadvantage: liable for what happens
Advantage: tax advantages, simple to establish
Internal Users correct answer: managers who plan, organize,
and run a business--marketing managers, production
supervisors, finance directors, and company officers;
MANAGEMENT
External Users correct answer: Investors, creditors, taxing
authorities, customers, labor unions, regulatory agencies:
STAKEHOLDERS
Current Assets correct answer: -assets that a company expects
to convert cash or use up within one year or the operating cycle,
whichever is longer
COMMON TYPES: cash, investments, receivables, inventories,
prepaid expenses
Current Liabilities correct answer: - obligations that the
company is to pay within the next year or operating cycle,
whichever is longer
COMMON TYPES: accounts payable, salaries and wages
payable, notes payable, interest payable, income taxes payable,
ALSO unearned revenue
PP&E correct answer: - long useful lives
- these are seen as assets on the balance sheet
COMMON TYPES: land, buildings, equipment, delivery
vehicles, and furniture
, Accumulated Depreciation correct answer: - total amount of
depreciation expensed thus far in the asset's life
- is seen as a contra asset
- appears just after the account it offsets on the balance sheet
Intangible Assets correct answer: - assets that do not have
physical substance
COMMON TYPES: goodwill, patents, copyrights, and
trademarks
Stockholders' Equity correct answer: - Common Stock:
investments of assets into the business by the stockholders
- Retained Earnings: income retained for use in the business
Accounting Equation correct answer: Assets = Liabilities +
Owner's Equity
Expanded Accounting Equation correct answer: Assets =
Liabilities + Stockholders' Equity
Assets = Liabilities + Cont. Capital + R.E.
Asset = Liab + Cont. Capital + Rev - Exp - Dividends
Asset + Exp + Divid = Cont. Capital + Rev + Liab
Liquidity Ratios correct answer: - measure the short-term
ability to pay maturing obligations and to meet unexpected
needs for cash
Current Ratio= Current Assets
---------------------------------
Current Liabilities
