ACCOUNTING 200 EXAM 1 (KU) UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
Question:
1. Type of Business Entities
Answer:
1. Sole Proprietorship
2. Partnership
3. Corporation
Question:
2. Sole Proprietorship
Answer:
owned by single individual who usually manages the operation of the business.
Owner is liable for any debts or obligations incurred by the business. important to
keep business accounting and owner acct separate.
Question:
3. Partnership
Answer:
has two or more owners; partnership would be viewed as a separate entity from
any of the owners but law does not view like that. can wind up being responsible
for liabilities that were incurred in the name of partnership but to which they did
not agree.
Question:
4. Corporation
Answer:
most complex form of ownership since it involves creating a separate legal entity
Question:
5. Characteristics of Corporation
Answer:
Legal entity, continuous life and transferable ownership interests, separation of
ownership and management, stockholders control, stockholders limited liability,
taxes, government involvement
, Question:
6. Legal Entity
Answer:
corp makes special application to specific satiate and state grants a charter to the
business giving it permission to be a corp. Business exists apart from its owners
and has right to sell property, enter agreements,
Question:
7. double taxation
Answer:
corp pays a return to investors in the form of dividends and then these investors
also may pay taxes on the same earnings. drawback to corporation form of
ownership
Question:
8. Generally Accepted Accounting Principles
Answer:
GAAP; accounting rules created by the FASB; company must follow these rules
when releasing financial statements;
US GAAP leans toward the historical cost concept
Question:
9. What is GAAP's purpose?
Answer:
to standardize financial statements so that they can be compared to one another,
to provide info about the aggregation of these transactions into a small et of
reported numbers.
Question:
10. International Financial Reporting Standards
Answer:
IFRS; International GAAP; IGAAP; international accounting system with the goal of
providing value accounting info that can be compared across companies no
matter what country it may originate. Created by the International Accounting
Standards Board (IASB); leans toward current cost as being more relevant
frequently referred to as the economic value concept
Question:
11. Assets
Answer:
economic resources that are expected to be of some future benefit to the
business.
QUESTIONS AND CORRECT ANSWERS
Question:
1. Type of Business Entities
Answer:
1. Sole Proprietorship
2. Partnership
3. Corporation
Question:
2. Sole Proprietorship
Answer:
owned by single individual who usually manages the operation of the business.
Owner is liable for any debts or obligations incurred by the business. important to
keep business accounting and owner acct separate.
Question:
3. Partnership
Answer:
has two or more owners; partnership would be viewed as a separate entity from
any of the owners but law does not view like that. can wind up being responsible
for liabilities that were incurred in the name of partnership but to which they did
not agree.
Question:
4. Corporation
Answer:
most complex form of ownership since it involves creating a separate legal entity
Question:
5. Characteristics of Corporation
Answer:
Legal entity, continuous life and transferable ownership interests, separation of
ownership and management, stockholders control, stockholders limited liability,
taxes, government involvement
, Question:
6. Legal Entity
Answer:
corp makes special application to specific satiate and state grants a charter to the
business giving it permission to be a corp. Business exists apart from its owners
and has right to sell property, enter agreements,
Question:
7. double taxation
Answer:
corp pays a return to investors in the form of dividends and then these investors
also may pay taxes on the same earnings. drawback to corporation form of
ownership
Question:
8. Generally Accepted Accounting Principles
Answer:
GAAP; accounting rules created by the FASB; company must follow these rules
when releasing financial statements;
US GAAP leans toward the historical cost concept
Question:
9. What is GAAP's purpose?
Answer:
to standardize financial statements so that they can be compared to one another,
to provide info about the aggregation of these transactions into a small et of
reported numbers.
Question:
10. International Financial Reporting Standards
Answer:
IFRS; International GAAP; IGAAP; international accounting system with the goal of
providing value accounting info that can be compared across companies no
matter what country it may originate. Created by the International Accounting
Standards Board (IASB); leans toward current cost as being more relevant
frequently referred to as the economic value concept
Question:
11. Assets
Answer:
economic resources that are expected to be of some future benefit to the
business.
