ACTG 244 EXAM 1 QUESTIONS WITH VERIFIED
ANSWERS
Differentiate between a "Business" and other organizations which use accounting -
Answers - An organization whose purpose is to generate a profit to increase owner'
wealth.
Name and describe the three forms of business ownership. - Answers - 1-
Proprietorship
2- Partnership
3- Corporation
Describe the role of corporate owners, the Board of Directors, and Management with
respect to operations, governance, reporting, and other functions described in the video.
- Answers - Corporate owners: not involved in day-to-day operations. They have the
right to Financial statements to see what their money is being used for.
The Board of Directors: representatives, elected by share holders, that govern the
wishes of the share holders. Also hire management positions. They also review
Financial statements and hire an independent auditor to review them.
Management: Hires lower level employees and run day-to-day operations of the
corporation. They are required to create Income, Cash flow, Owners Equity statements,
and the Balance sheet.
Describe the Entity Principle - Answers - The organization keeps its records separately
from the owners' records.
Identify the components of the Accounting Equation - Answers - ASSETS= LIABILITIES
+ EQUITY
Differentiate between Financial Accounting and Managerial Accounting - Answers -
Financial Accounting: aggregation of accounting information into financial statements.
Must follow GAAP.
Managerial Accounting: the internal processes used to account for business
transactions. Frequently deals with estimates, rather than proven and verifiable facts.
Differentiate between Public Accountants and Private Accountants, and describe the
basic role played by each in society. - Answers - Public Accountants: Provides services
on a contractual or "for hire" basis. (If they only provide bookkeeping and tax services,
they don't need a certification.)
ANSWERS
Differentiate between a "Business" and other organizations which use accounting -
Answers - An organization whose purpose is to generate a profit to increase owner'
wealth.
Name and describe the three forms of business ownership. - Answers - 1-
Proprietorship
2- Partnership
3- Corporation
Describe the role of corporate owners, the Board of Directors, and Management with
respect to operations, governance, reporting, and other functions described in the video.
- Answers - Corporate owners: not involved in day-to-day operations. They have the
right to Financial statements to see what their money is being used for.
The Board of Directors: representatives, elected by share holders, that govern the
wishes of the share holders. Also hire management positions. They also review
Financial statements and hire an independent auditor to review them.
Management: Hires lower level employees and run day-to-day operations of the
corporation. They are required to create Income, Cash flow, Owners Equity statements,
and the Balance sheet.
Describe the Entity Principle - Answers - The organization keeps its records separately
from the owners' records.
Identify the components of the Accounting Equation - Answers - ASSETS= LIABILITIES
+ EQUITY
Differentiate between Financial Accounting and Managerial Accounting - Answers -
Financial Accounting: aggregation of accounting information into financial statements.
Must follow GAAP.
Managerial Accounting: the internal processes used to account for business
transactions. Frequently deals with estimates, rather than proven and verifiable facts.
Differentiate between Public Accountants and Private Accountants, and describe the
basic role played by each in society. - Answers - Public Accountants: Provides services
on a contractual or "for hire" basis. (If they only provide bookkeeping and tax services,
they don't need a certification.)
