ACCT 229 MAIN EXAMINATION 2026 QUESTIONS AND
ANSWERS RATED A+
✔✔Purpose of statement of stockholders equity - ✔✔shows how net income, dividends,
and changes in stock causes change in a company's financial position during a period
of time
✔✔ sole proprietorship - ✔✔-1 owner
-easy to form
-'unlimited liability
-separate entity for accounting purposes
-not separate entity for tax purposes
✔✔partnership - ✔✔-two or more owners
-'unlimited liability'
-separate entity for acct purposes
-not separate entity for tax purposes
✔✔corporation - ✔✔-sell shares of stock to owners
-separate legal entity from owners
-fully separate for acct & tax purposes
✔✔corportation adv and disad - ✔✔adv: 1. limited liability for owners
2. continuity of life
3. ease in transfer of ownership
4. opportunity to raise capital through stock sale
DISADV: DOUBLE TAXATION
✔✔double taxation - ✔✔a corporation pays income taxes on its earnings, and when
dividends are distributed to stockholders, the stockholders pay taxes a second time on
the corporate dividends they receive
✔✔financing - ✔✔how company pays for growth/expansion
-includes borrowing and selling ownership
✔✔borrowing - ✔✔temp form of financing
✔✔selling ownership - ✔✔permanent form issue equity
✔✔investing - ✔✔purchasing resources (assets) to be used in day to day ops
✔✔operating - ✔✔activities that earn revenue and generate expenses
ANSWERS RATED A+
✔✔Purpose of statement of stockholders equity - ✔✔shows how net income, dividends,
and changes in stock causes change in a company's financial position during a period
of time
✔✔ sole proprietorship - ✔✔-1 owner
-easy to form
-'unlimited liability
-separate entity for accounting purposes
-not separate entity for tax purposes
✔✔partnership - ✔✔-two or more owners
-'unlimited liability'
-separate entity for acct purposes
-not separate entity for tax purposes
✔✔corporation - ✔✔-sell shares of stock to owners
-separate legal entity from owners
-fully separate for acct & tax purposes
✔✔corportation adv and disad - ✔✔adv: 1. limited liability for owners
2. continuity of life
3. ease in transfer of ownership
4. opportunity to raise capital through stock sale
DISADV: DOUBLE TAXATION
✔✔double taxation - ✔✔a corporation pays income taxes on its earnings, and when
dividends are distributed to stockholders, the stockholders pay taxes a second time on
the corporate dividends they receive
✔✔financing - ✔✔how company pays for growth/expansion
-includes borrowing and selling ownership
✔✔borrowing - ✔✔temp form of financing
✔✔selling ownership - ✔✔permanent form issue equity
✔✔investing - ✔✔purchasing resources (assets) to be used in day to day ops
✔✔operating - ✔✔activities that earn revenue and generate expenses
