ACCT 2810 MILLER EXAM 1 | ACTUAL
STUDY SET | QUESTIONS AND
VERIFIED ANSWERS
proprietorship - ANSW-is owned by one individual. More than 70% of the businesses in the United States
are organized as proprietorships. This is due to the ease and low cost of organizing a proprietorship.
partnership - ANSW-is similar to a proprietorship, but it is owned by two or more individuals. About 10%
of the businesses in the United States are organized as partnerships.
corporation - ANSW-operates as a separate legal entity under state or federal statutes. The ownership of
a corporation is divided into shares of stock, which each stockholder purchases to gain ownership
interest in the corporation.
Limited liability companies (LLC) - ANSW-combine the ownership attributes of a partnership and a
corporation. These companies mainly operate like partnership firms, but the owners have limited
liability, which is an advantage of the corporate structure.
Service business - ANSW-Provides services rather than products to customers. (Delta Airlines,
Hairmasters, Tailgate Guys)
Merchandising business - ANSW-Provides services rather than products to customers. (Delta Airlines,
Hairmasters, Tailgate Guys)
Manufacturing business - ANSW-Changes basic inputs into products that are sold to customers. (Baxter
International, Hyundai)
business - ANSW-is an organization in which basic resources (inputs), such as materials and labor, are
assembled and processed to provide goods or services (outputs) to customers. -Businesses come in all
sizes, from a local coffee house to Starbucks, which sells over $16 billion of coffee and related products
each year.
Profit - ANSW-is the difference between the amounts received from customers for goods or services and
the amounts paid for the inputs used to provide the goods or services.
Revenues minus expenses - ANSW-Net Income (Loss)
Low-cost strategy - ANSW-A company designs and produces products or services at a lower cost than its
competitors.
Premium-price strategy - ANSW-A company tries to design and produce products or services that serve
unique market needs, allowing it to charge premium prices
low cost - ANSW-south west, Union pacific, Hyudai, Sam Club, Ameritrade, Super 8
Premium cost - ANSW-virgin Atlantic, fedex, BMW, Tabot, Ritz carlton
Business stakeholder - ANSW-A person or entity with an interest in the economic performance and well-
being of a company.
Capital market stakeholders - ANSW-Provide the financing for a company to start, expand, or continue
business. Banks and long-term creditors expect to recover the original amount loaned plus interest.
Stockholders want to maximize the economic value of their investment in a business.
Product or service market shareholders - ANSW-Purchase the company's products and services or sell
their products and services to the company. Customers have a stake in the success of a company in order
, to be assured that they will receive their products or services. Likewise, a supplier depends on continued
success of their customers.
Government stakeholders - ANSW-Include federal, state, country, city, or other regulatory bodies. The
more successful a company, the more it will pay in taxes to the government.
Internal stakeholders - ANSW-Include managers and employees who depend upon the continued success
of a company in order to remain employed.
financing activities - ANSW-Borrowing from a 3rd party, Owner investments in the business
Operating Activities - ANSW-Use of assets to earn revenues and profits, Revenues < expenses = net loss;
Revenues > expenses = net income
Investing Activities - ANSW-Use of business assets to acquire more assets: tangible (machinery, buildings,
computers, etc.), intangible (patents and goodwill)
Financing Activities - ANSW-Borrowing and Selling Ownership
Account payable - ANSW-Liability created when a company borrows from a vendor or supplier
Bond payable - ANSW-Long-term financing, Any interest due is reported as interest payable
Note payable - ANSW-Payment of an amount borrowed plus interest, Issued on a short-term or long-
term basis
common stock (also called capital stock) - ANSW-Shares of ownership for corporations are issued in the
form of shares of stock. A company can borrow from its vendors or suppliers, or by issuing bonds, notes
payable, or shares of ownership. The basic type of stock issued to owners is called _____
stockholders - ANSW-Investors who purchase the stock are referred to as ____
Assets - ANSW-are the resources owned by a corporation (company).
Creditors - ANSW-have first claim on the company's assets. They receive timely payments, which may
include interest.
Investing Activities - ANSW-Types of assets:
Tangible assets - ANSW-Assets that have physical characteristics (equipment, machinery, automobiles,
buildings, land, office equipment, etc.)
Intangible assets - ANSW-Include assets such as patents, goodwill, and copyrights
Operating Activities - ANSW-Revenues and Expenses
Sources of revenue - ANSW-Sales, Fees earned, Expenses, Cost of goods sold, cost of merchandise sold,
or cost of sales, Selling expenses (advertising, sales salaries, delivery expense, etc.), Administrative
expenses (wages, rent, insurance, utilities, depreciation, supplies, etc.)
fees earned - ANSW-Revenues received from providing services are called _____
cost of goods sold, cost of merchandise sold, or cost of sales - ANSW-The cost of products sold is referred
to as _____
Selling expenses - ANSW-include those costs directly related to the selling of a product or service.
Administrative expenses - ANSW-include other costs not directly related to the selling, such as officer
salaries and other costs of the corporate office.
net income - ANSW-When revenues exceed expenses, the company earns
net loss - ANSW-results when expenses exceed revenues.
STUDY SET | QUESTIONS AND
VERIFIED ANSWERS
proprietorship - ANSW-is owned by one individual. More than 70% of the businesses in the United States
are organized as proprietorships. This is due to the ease and low cost of organizing a proprietorship.
partnership - ANSW-is similar to a proprietorship, but it is owned by two or more individuals. About 10%
of the businesses in the United States are organized as partnerships.
corporation - ANSW-operates as a separate legal entity under state or federal statutes. The ownership of
a corporation is divided into shares of stock, which each stockholder purchases to gain ownership
interest in the corporation.
Limited liability companies (LLC) - ANSW-combine the ownership attributes of a partnership and a
corporation. These companies mainly operate like partnership firms, but the owners have limited
liability, which is an advantage of the corporate structure.
Service business - ANSW-Provides services rather than products to customers. (Delta Airlines,
Hairmasters, Tailgate Guys)
Merchandising business - ANSW-Provides services rather than products to customers. (Delta Airlines,
Hairmasters, Tailgate Guys)
Manufacturing business - ANSW-Changes basic inputs into products that are sold to customers. (Baxter
International, Hyundai)
business - ANSW-is an organization in which basic resources (inputs), such as materials and labor, are
assembled and processed to provide goods or services (outputs) to customers. -Businesses come in all
sizes, from a local coffee house to Starbucks, which sells over $16 billion of coffee and related products
each year.
Profit - ANSW-is the difference between the amounts received from customers for goods or services and
the amounts paid for the inputs used to provide the goods or services.
Revenues minus expenses - ANSW-Net Income (Loss)
Low-cost strategy - ANSW-A company designs and produces products or services at a lower cost than its
competitors.
Premium-price strategy - ANSW-A company tries to design and produce products or services that serve
unique market needs, allowing it to charge premium prices
low cost - ANSW-south west, Union pacific, Hyudai, Sam Club, Ameritrade, Super 8
Premium cost - ANSW-virgin Atlantic, fedex, BMW, Tabot, Ritz carlton
Business stakeholder - ANSW-A person or entity with an interest in the economic performance and well-
being of a company.
Capital market stakeholders - ANSW-Provide the financing for a company to start, expand, or continue
business. Banks and long-term creditors expect to recover the original amount loaned plus interest.
Stockholders want to maximize the economic value of their investment in a business.
Product or service market shareholders - ANSW-Purchase the company's products and services or sell
their products and services to the company. Customers have a stake in the success of a company in order
, to be assured that they will receive their products or services. Likewise, a supplier depends on continued
success of their customers.
Government stakeholders - ANSW-Include federal, state, country, city, or other regulatory bodies. The
more successful a company, the more it will pay in taxes to the government.
Internal stakeholders - ANSW-Include managers and employees who depend upon the continued success
of a company in order to remain employed.
financing activities - ANSW-Borrowing from a 3rd party, Owner investments in the business
Operating Activities - ANSW-Use of assets to earn revenues and profits, Revenues < expenses = net loss;
Revenues > expenses = net income
Investing Activities - ANSW-Use of business assets to acquire more assets: tangible (machinery, buildings,
computers, etc.), intangible (patents and goodwill)
Financing Activities - ANSW-Borrowing and Selling Ownership
Account payable - ANSW-Liability created when a company borrows from a vendor or supplier
Bond payable - ANSW-Long-term financing, Any interest due is reported as interest payable
Note payable - ANSW-Payment of an amount borrowed plus interest, Issued on a short-term or long-
term basis
common stock (also called capital stock) - ANSW-Shares of ownership for corporations are issued in the
form of shares of stock. A company can borrow from its vendors or suppliers, or by issuing bonds, notes
payable, or shares of ownership. The basic type of stock issued to owners is called _____
stockholders - ANSW-Investors who purchase the stock are referred to as ____
Assets - ANSW-are the resources owned by a corporation (company).
Creditors - ANSW-have first claim on the company's assets. They receive timely payments, which may
include interest.
Investing Activities - ANSW-Types of assets:
Tangible assets - ANSW-Assets that have physical characteristics (equipment, machinery, automobiles,
buildings, land, office equipment, etc.)
Intangible assets - ANSW-Include assets such as patents, goodwill, and copyrights
Operating Activities - ANSW-Revenues and Expenses
Sources of revenue - ANSW-Sales, Fees earned, Expenses, Cost of goods sold, cost of merchandise sold,
or cost of sales, Selling expenses (advertising, sales salaries, delivery expense, etc.), Administrative
expenses (wages, rent, insurance, utilities, depreciation, supplies, etc.)
fees earned - ANSW-Revenues received from providing services are called _____
cost of goods sold, cost of merchandise sold, or cost of sales - ANSW-The cost of products sold is referred
to as _____
Selling expenses - ANSW-include those costs directly related to the selling of a product or service.
Administrative expenses - ANSW-include other costs not directly related to the selling, such as officer
salaries and other costs of the corporate office.
net income - ANSW-When revenues exceed expenses, the company earns
net loss - ANSW-results when expenses exceed revenues.
