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ACCT 229 TAMU Exam 1 Questions and
Answers 100% Solved
business - ✔✔all activities necessary to provide the members of an
economic system with goods and services
3 forms of business organization - ✔✔-sole proprietorship
-partnership
-corporation
sole proprietorship - ✔✔one owner
advantage: easy to form
disadvantage: unlimited liability by the owner
partnership - ✔✔two or more owners; profits or losses are divided among
the owners
advantage: easy to form
disadvantage: unlimited liabilitiy
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corporation - ✔✔business incorporated under the laws of a particular state.
must file a charter and bylaws with the state. board of directors make
decisions, shareholders all have partial ownership
disadvantage: startup effort
advantages of corporation - ✔✔-limited liability for all owners
-continuity of life - theoretically goes on forever
-ease in transfer of ownership (stock)
-can raise large amounts of money through selling shares of stock
3 types of business activities - ✔✔financing, investing, operating
Financing - ✔✔-how a company pays for growth/expansion/startup
- ex. issuing shares of common stock or borrowing money from bank
investing - ✔✔-purchasing resources to be used in day to day operations
-ex. land, buildings, equipment, patents, etc
operating - ✔✔-activities that earn revenue and generate expenses
-ex. selling goods, paying rent, paying utilities, etc
purpose of accounting - ✔✔to identify, measure, and communicate
information about a company that is useful in making economic decisions
2 types of user group - ✔✔external and internal
, ©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
external user group - ✔✔-ex. investors, shareholders, creditors, IRS
-needed info: stewardship (profitable or not?), valuation, liquidity
-how they get info: quarterly and annual financial statements
internal user group - ✔✔-ex. managers, directors, CEO/CFO
-needed info: budget, planning/forcasting
-how they get info: financial statements, managerial accounting
4 types of financial statements - ✔✔1. balance sheet
2. income statement
3. statement of retained earnings
4. statement of cash flows
balance sheet - ✔✔-shows the financial position of the company at a
SINGLE POINT in time
-uses THE accounting equation
THE accounting equation - ✔✔Assets = Liabilities + Stockholder's Equity
Assets - ✔✔resources that will produce a future economic benefit, held by
the company
-ex. cash, accounts receivable, buildings, land, etc
liabilities - ✔✔debt owed to creditors, suppliers, employees, or customers
ACCT 229 TAMU Exam 1 Questions and
Answers 100% Solved
business - ✔✔all activities necessary to provide the members of an
economic system with goods and services
3 forms of business organization - ✔✔-sole proprietorship
-partnership
-corporation
sole proprietorship - ✔✔one owner
advantage: easy to form
disadvantage: unlimited liability by the owner
partnership - ✔✔two or more owners; profits or losses are divided among
the owners
advantage: easy to form
disadvantage: unlimited liabilitiy
,©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
corporation - ✔✔business incorporated under the laws of a particular state.
must file a charter and bylaws with the state. board of directors make
decisions, shareholders all have partial ownership
disadvantage: startup effort
advantages of corporation - ✔✔-limited liability for all owners
-continuity of life - theoretically goes on forever
-ease in transfer of ownership (stock)
-can raise large amounts of money through selling shares of stock
3 types of business activities - ✔✔financing, investing, operating
Financing - ✔✔-how a company pays for growth/expansion/startup
- ex. issuing shares of common stock or borrowing money from bank
investing - ✔✔-purchasing resources to be used in day to day operations
-ex. land, buildings, equipment, patents, etc
operating - ✔✔-activities that earn revenue and generate expenses
-ex. selling goods, paying rent, paying utilities, etc
purpose of accounting - ✔✔to identify, measure, and communicate
information about a company that is useful in making economic decisions
2 types of user group - ✔✔external and internal
, ©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
external user group - ✔✔-ex. investors, shareholders, creditors, IRS
-needed info: stewardship (profitable or not?), valuation, liquidity
-how they get info: quarterly and annual financial statements
internal user group - ✔✔-ex. managers, directors, CEO/CFO
-needed info: budget, planning/forcasting
-how they get info: financial statements, managerial accounting
4 types of financial statements - ✔✔1. balance sheet
2. income statement
3. statement of retained earnings
4. statement of cash flows
balance sheet - ✔✔-shows the financial position of the company at a
SINGLE POINT in time
-uses THE accounting equation
THE accounting equation - ✔✔Assets = Liabilities + Stockholder's Equity
Assets - ✔✔resources that will produce a future economic benefit, held by
the company
-ex. cash, accounts receivable, buildings, land, etc
liabilities - ✔✔debt owed to creditors, suppliers, employees, or customers
