ACCT-2000 PRINCIPLES OF
ACCOUNTING\INTRODUCTION TO
ACCOUNTING || EXAM 1 BY
LOWE-ARDOIN|||NEWEST
UPDATE
Which type of business is super easy to establish, only gets taxed once but the owner is
personally liable for everything? -CORRECT ANSWER Sole Proprietorship
Which type of business is formed between two or more people giving them broader
skills and resources, super easy to establish, only gets taxed once, but the owners are
personal liable for everything? -CORRECT ANSWER Partnership
Which type of business sells stock? -CORRECT ANSWER Corporation
Which type of business can easily share its ownership and raise capital with no
personal liability but gets taxed twice? -CORRECT ANSWER Corporation
Accounting is the information system that ___________, ___________, and
____________ the economic events of an organization to interested users. -CORRECT
ANSWER identifies; records; communicates
A corporation is a ___________ __________ __________ from its investors. -
CORRECT ANSWER separate legal entity
Which is an advantage of corporations relative to partnerships and sole proprietorships?
-CORRECT ANSWER reduced legal liability for investors
Which forms of business organizations are considered to be separate accounting
entities? -CORRECT ANSWER Sole Proprietorship, Partnership, and Corporation
Every business, regardless of the form, needs separate _______________ entities. -
CORRECT ANSWER accounting
What are the types of users of accounting information? -CORRECT ANSWER internal
and external
What are some examples of internal accounting information users? -CORRECT
ANSWER managers, supervisors, and company officials
, What are some examples of external accounting information users? -CORRECT
ANSWER investors, creditors, and regulators
How do internal accounting information users use financial information? -CORRECT
ANSWER to plan, organize, and run a business
How do external accounting information users use financial information? -CORRECT
ANSWER to make decisions about buying or selling stock or loaning company money
Effective financial reporting depends on sound __________ ______________. -
CORRECT ANSWER ethic behavior
What are the three types of business activities? -CORRECT ANSWER financing,
investing, and operating
What is financing? -CORRECT ANSWER raising money or capitals
What is investing? -CORRECT ANSWER purchasing resources needed to operate
What is operating? -CORRECT ANSWER daily activities of business
Borrowing money from creditors and issuing (selling) shares of stock to investors are
examples of ___________. -CORRECT ANSWER financing
Resources that are owned and used by a business daily (computers, equipment,
delivery trucks) are considered ______________. -CORRECT ANSWER investments
A shoe store selling shoes, a dentist cleaning teeth, and a lawn care company mowing
lawns would be examples of ________________ activities. -CORRECT ANSWER
operating
What are the four types of financial statements? -CORRECT ANSWER income
statement, retained earnings statement, and balance sheet
What is the purpose of an income statement? -CORRECT ANSWER to report revenue
and expenses over a period of time
What are the components of an income statement? -CORRECT ANSWER revenues -
expenses = net income
What is the retained earnings statement? -CORRECT ANSWER reports the net income
retained in the business and any changes in the net income
What is the purpose of a balance sheet? -CORRECT ANSWER reports assets and
claims to assets at a specific point in time
ACCOUNTING\INTRODUCTION TO
ACCOUNTING || EXAM 1 BY
LOWE-ARDOIN|||NEWEST
UPDATE
Which type of business is super easy to establish, only gets taxed once but the owner is
personally liable for everything? -CORRECT ANSWER Sole Proprietorship
Which type of business is formed between two or more people giving them broader
skills and resources, super easy to establish, only gets taxed once, but the owners are
personal liable for everything? -CORRECT ANSWER Partnership
Which type of business sells stock? -CORRECT ANSWER Corporation
Which type of business can easily share its ownership and raise capital with no
personal liability but gets taxed twice? -CORRECT ANSWER Corporation
Accounting is the information system that ___________, ___________, and
____________ the economic events of an organization to interested users. -CORRECT
ANSWER identifies; records; communicates
A corporation is a ___________ __________ __________ from its investors. -
CORRECT ANSWER separate legal entity
Which is an advantage of corporations relative to partnerships and sole proprietorships?
-CORRECT ANSWER reduced legal liability for investors
Which forms of business organizations are considered to be separate accounting
entities? -CORRECT ANSWER Sole Proprietorship, Partnership, and Corporation
Every business, regardless of the form, needs separate _______________ entities. -
CORRECT ANSWER accounting
What are the types of users of accounting information? -CORRECT ANSWER internal
and external
What are some examples of internal accounting information users? -CORRECT
ANSWER managers, supervisors, and company officials
, What are some examples of external accounting information users? -CORRECT
ANSWER investors, creditors, and regulators
How do internal accounting information users use financial information? -CORRECT
ANSWER to plan, organize, and run a business
How do external accounting information users use financial information? -CORRECT
ANSWER to make decisions about buying or selling stock or loaning company money
Effective financial reporting depends on sound __________ ______________. -
CORRECT ANSWER ethic behavior
What are the three types of business activities? -CORRECT ANSWER financing,
investing, and operating
What is financing? -CORRECT ANSWER raising money or capitals
What is investing? -CORRECT ANSWER purchasing resources needed to operate
What is operating? -CORRECT ANSWER daily activities of business
Borrowing money from creditors and issuing (selling) shares of stock to investors are
examples of ___________. -CORRECT ANSWER financing
Resources that are owned and used by a business daily (computers, equipment,
delivery trucks) are considered ______________. -CORRECT ANSWER investments
A shoe store selling shoes, a dentist cleaning teeth, and a lawn care company mowing
lawns would be examples of ________________ activities. -CORRECT ANSWER
operating
What are the four types of financial statements? -CORRECT ANSWER income
statement, retained earnings statement, and balance sheet
What is the purpose of an income statement? -CORRECT ANSWER to report revenue
and expenses over a period of time
What are the components of an income statement? -CORRECT ANSWER revenues -
expenses = net income
What is the retained earnings statement? -CORRECT ANSWER reports the net income
retained in the business and any changes in the net income
What is the purpose of a balance sheet? -CORRECT ANSWER reports assets and
claims to assets at a specific point in time
