ACCT 2101 Final Exam questions with
complete solutions
Characteristics of a Sole Proprietorship - CORRECT ANSWER ✔✔one man operation
business's income is added to the income of the owner for tax purposes
unlimited liability
the business' income isn't taxed
no legal requirements to create it
Characteristics of a Partnership - CORRECT ANSWER ✔✔2+ individuals
jointly liable for taxes and other obligations
Characteristics of a Corporation - CORRECT ANSWER ✔✔many owners called shareholders
limited liability
the owners are not held responsible for debts and obligations
double taxation
Accounting - CORRECT ANSWER ✔✔an information system that identifies information, records
it, then communicates information that is relevant, reliable, and comparable in order to help
users make better decisions
what type of accounting are we studying in this class? - CORRECT ANSWER ✔✔financial
accounting
4 principles of accounting - CORRECT ANSWER ✔✔cost principle
matching principle
, revenue recognition principle
full disclosure principle
4 assumptions of accounting - CORRECT ANSWER ✔✔business entity assumption
time period assumption
going concern assumption
monetary unit assumption
cost principle - CORRECT ANSWER ✔✔things should be recorded at what they were paid for and
not what their value is
revenue recognition principle - CORRECT ANSWER ✔✔helps guide companies in when to record
their revenues
matching principle - CORRECT ANSWER ✔✔a company must record its expenses incurred to
generate its revenue
full disclosure principle - CORRECT ANSWER ✔✔a company is required to disclose all
information that would impact a user's decision
going concern assumption - CORRECT ANSWER ✔✔you assume that the company will last
forever
time period assumption - CORRECT ANSWER ✔✔the life of a business can be broken down into
distinct time periods such as months or years in order to make reports about them
monetary unit assumption - CORRECT ANSWER ✔✔transactions are expressed using "money"
as a denominator -- just different currencies
complete solutions
Characteristics of a Sole Proprietorship - CORRECT ANSWER ✔✔one man operation
business's income is added to the income of the owner for tax purposes
unlimited liability
the business' income isn't taxed
no legal requirements to create it
Characteristics of a Partnership - CORRECT ANSWER ✔✔2+ individuals
jointly liable for taxes and other obligations
Characteristics of a Corporation - CORRECT ANSWER ✔✔many owners called shareholders
limited liability
the owners are not held responsible for debts and obligations
double taxation
Accounting - CORRECT ANSWER ✔✔an information system that identifies information, records
it, then communicates information that is relevant, reliable, and comparable in order to help
users make better decisions
what type of accounting are we studying in this class? - CORRECT ANSWER ✔✔financial
accounting
4 principles of accounting - CORRECT ANSWER ✔✔cost principle
matching principle
, revenue recognition principle
full disclosure principle
4 assumptions of accounting - CORRECT ANSWER ✔✔business entity assumption
time period assumption
going concern assumption
monetary unit assumption
cost principle - CORRECT ANSWER ✔✔things should be recorded at what they were paid for and
not what their value is
revenue recognition principle - CORRECT ANSWER ✔✔helps guide companies in when to record
their revenues
matching principle - CORRECT ANSWER ✔✔a company must record its expenses incurred to
generate its revenue
full disclosure principle - CORRECT ANSWER ✔✔a company is required to disclose all
information that would impact a user's decision
going concern assumption - CORRECT ANSWER ✔✔you assume that the company will last
forever
time period assumption - CORRECT ANSWER ✔✔the life of a business can be broken down into
distinct time periods such as months or years in order to make reports about them
monetary unit assumption - CORRECT ANSWER ✔✔transactions are expressed using "money"
as a denominator -- just different currencies
