ACC 253 Exam 1 Questions and Answers 2024

Sole Proprietorship - A business owned by one person Simple to set up and gives you control over business Partnership - A business owned by two or more persons associated as partners. Typically a partnership agreement sets forth terms, such as initial investment, duties of each partner, division of profits or losses, and the settlement ti be made upon dissolving partnershup Corporation - A business organized as a separate legal entity under state cooperation and having ownership divided into transferable shares of stock It is easier to raise funds for because stockholders can invest relatively small amounts of money into the corporation Purpose of Financial Information - Provide inputs for decision making Accounting - Information system that identifies, records, and communicates the economic events of an organization to interested users Internal Users - Managers who plan, organize, and run a business Positions inside of the company Investors (owners) - External User Make decisions to buy, sell, or hold stock Creditors (supplier and bankers) - External User Evaluate the risk of selling on credit or lending money Taxing Authorities - External Users Comply with tax laws Regulatory Agencies - External Users Operating within prescribed rules Customers - External Users Honor warranties and support product lines, provide services Labor Unions - External User Pay increases wages and benefits