Accounting Exam 2025 With 100%
Correct Answers
sole proprietorship - CORRECT ANSWER✔✔owned by one individual, easiest doesn't require
special legal maneuvers. Profits or losses become apart of the taxable income of the oner and
they are responsible
partnership - CORRECT ANSWER✔✔legal liabilities are responsible of to or more oweners. More
$, lawyer typically needed. more owners more resources.
Corporation - CORRECT ANSWER✔✔Separate entity from legal/accounting perspectives.
Owners are not responsible for taxes and debts. Owners cant lose more then their investment.
Downside is legal fees to create are expensive, income taxes must be paid by both the
corporation and its owners.
Creditors - CORRECT ANSWER✔✔Suppliers, Banks, anyone whom money is owed. Will evaluate
a companies financial statements and credit history before credit.
Investors - CORRECT ANSWER✔✔Existing/potential stockholders. Look to accounting info to
asses strength and estimate its value.
Directors - CORRECT ANSWER✔✔Compnys board. Stockholders elect directors to oversee
managers. Use financial statements to ensure the companys make best decisons.
goverment - CORRECT ANSWER✔✔looks closely at financial statements.
(SEC)- responsible for function of stock markets, keeps close atch on the informtion public
companies report in financial statements.
, (IRS) - Use financial statement to ensure taxes are correct
Assets - CORRECT ANSWER✔✔Resources the company controls
Liabilites - CORRECT ANSWER✔✔measurable amounts the company expects to give up in the
future to settle owes to creditors
Stockholders' Equity - CORRECT ANSWER✔✔owners claims on assets of the business after
creditors claims have been fulfilled
Separate Entity Assumption - CORRECT ANSWER✔✔business transactions are separate from
and should exclude the personal transactions of the owners.
Common Stock ( Paid-in capitol ) - CORRECT ANSWER✔✔Paid by stockholders the owners have
a claim for amounts they contributed in exchange for stock.
Retained Earnings ( Earned Capitol ) - CORRECT ANSWER✔✔equity earned by company
revenues - CORRECT ANSWER✔✔earned by selling good or services.
expenses - CORRECT ANSWER✔✔Costs of doing business necessary to earn revenue expenses
such as advertising utilities rent salaries wages insurance and supplies used in the office.
Net icome - CORRECT ANSWER✔✔Calculated as revenues minus expenses. By generating net
income a company increases its stockholders equity.
Correct Answers
sole proprietorship - CORRECT ANSWER✔✔owned by one individual, easiest doesn't require
special legal maneuvers. Profits or losses become apart of the taxable income of the oner and
they are responsible
partnership - CORRECT ANSWER✔✔legal liabilities are responsible of to or more oweners. More
$, lawyer typically needed. more owners more resources.
Corporation - CORRECT ANSWER✔✔Separate entity from legal/accounting perspectives.
Owners are not responsible for taxes and debts. Owners cant lose more then their investment.
Downside is legal fees to create are expensive, income taxes must be paid by both the
corporation and its owners.
Creditors - CORRECT ANSWER✔✔Suppliers, Banks, anyone whom money is owed. Will evaluate
a companies financial statements and credit history before credit.
Investors - CORRECT ANSWER✔✔Existing/potential stockholders. Look to accounting info to
asses strength and estimate its value.
Directors - CORRECT ANSWER✔✔Compnys board. Stockholders elect directors to oversee
managers. Use financial statements to ensure the companys make best decisons.
goverment - CORRECT ANSWER✔✔looks closely at financial statements.
(SEC)- responsible for function of stock markets, keeps close atch on the informtion public
companies report in financial statements.
, (IRS) - Use financial statement to ensure taxes are correct
Assets - CORRECT ANSWER✔✔Resources the company controls
Liabilites - CORRECT ANSWER✔✔measurable amounts the company expects to give up in the
future to settle owes to creditors
Stockholders' Equity - CORRECT ANSWER✔✔owners claims on assets of the business after
creditors claims have been fulfilled
Separate Entity Assumption - CORRECT ANSWER✔✔business transactions are separate from
and should exclude the personal transactions of the owners.
Common Stock ( Paid-in capitol ) - CORRECT ANSWER✔✔Paid by stockholders the owners have
a claim for amounts they contributed in exchange for stock.
Retained Earnings ( Earned Capitol ) - CORRECT ANSWER✔✔equity earned by company
revenues - CORRECT ANSWER✔✔earned by selling good or services.
expenses - CORRECT ANSWER✔✔Costs of doing business necessary to earn revenue expenses
such as advertising utilities rent salaries wages insurance and supplies used in the office.
Net icome - CORRECT ANSWER✔✔Calculated as revenues minus expenses. By generating net
income a company increases its stockholders equity.
