ACCT 2401 Exam 1 Study Guide | Accounting Review, Key Concepts & Practice
Questions
financial accounting - ✔✔the process of recognizing, measuring, recording, and reporting
information about a business's transactions to stakeholders outside the business, including
stockholders (owners) and lenders
business - ✔✔a legal organization that attempts to create value by exchanging products with
customers for money
three elements to being a business - ✔✔-be a legal entity
-must exchange a product for money or money substitutes
-businesses create value
value - ✔✔the price someone is willing to pay for an item
-what the owner of an item expects to receive
-when the owner expects to receive it
-how certain the owner is about what they will receive and when it will be received
stakeholder - ✔✔a person or organization affected by a business
the goal of a business - ✔✔to create value for its owners
how can a business acquire money to operate? - ✔✔1- borrowing money from lenders
(liabilities)
2- getting owners to put in their money (stockholders' equity) in exchanged for a percentage of
ownership
, assest - ✔✔an economic resource that a business owns and can use to operate the business
(cash, inventory, equipment)
net income - ✔✔=revenue-expenses
three types of businesses - ✔✔service, merchandising, and manufacturing
four legal forms of businesses - ✔✔sole proprietorship, partnership, corporation, and limited
liability company
sole proprietorship - ✔✔business entity that has one owner, where, for legal and tex purposes,
the business and the owner are considered the same
partner ship - ✔✔business that has more than one owner, where , for legal and tac purposes,
the business and the owners are considered the same
corporation - ✔✔legal entity, chartered under state law, empowered to conduct business; the
corporation and owners are considered as separate for legal and tax purposes
limited liability company - ✔✔hybrid business entity having characteristics of both a
corporation and a partnership
dividend - ✔✔the payment of past and current profits, less losses, previously retained in the
business
s-corporation - ✔✔a small corporation that has met the legal requirements to act as a
corporation but elected to be taxed at individual rates
G=
Questions
financial accounting - ✔✔the process of recognizing, measuring, recording, and reporting
information about a business's transactions to stakeholders outside the business, including
stockholders (owners) and lenders
business - ✔✔a legal organization that attempts to create value by exchanging products with
customers for money
three elements to being a business - ✔✔-be a legal entity
-must exchange a product for money or money substitutes
-businesses create value
value - ✔✔the price someone is willing to pay for an item
-what the owner of an item expects to receive
-when the owner expects to receive it
-how certain the owner is about what they will receive and when it will be received
stakeholder - ✔✔a person or organization affected by a business
the goal of a business - ✔✔to create value for its owners
how can a business acquire money to operate? - ✔✔1- borrowing money from lenders
(liabilities)
2- getting owners to put in their money (stockholders' equity) in exchanged for a percentage of
ownership
, assest - ✔✔an economic resource that a business owns and can use to operate the business
(cash, inventory, equipment)
net income - ✔✔=revenue-expenses
three types of businesses - ✔✔service, merchandising, and manufacturing
four legal forms of businesses - ✔✔sole proprietorship, partnership, corporation, and limited
liability company
sole proprietorship - ✔✔business entity that has one owner, where, for legal and tex purposes,
the business and the owner are considered the same
partner ship - ✔✔business that has more than one owner, where , for legal and tac purposes,
the business and the owners are considered the same
corporation - ✔✔legal entity, chartered under state law, empowered to conduct business; the
corporation and owners are considered as separate for legal and tax purposes
limited liability company - ✔✔hybrid business entity having characteristics of both a
corporation and a partnership
dividend - ✔✔the payment of past and current profits, less losses, previously retained in the
business
s-corporation - ✔✔a small corporation that has met the legal requirements to act as a
corporation but elected to be taxed at individual rates
G=
