ACC 200 EXAM 1 (CHAPTER 1, 2, 3) UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
Question:
1. Sole Proprietorship
Answer:
Owned by one person. Simple to set up. Owner maintains control. Owners are
liable for business debts because it is not a separate legal entity.
Question:
2. Partnerhsip
Answer:
Two more more people decide to go into business together. Often formed when
one person doesn't have the economic resources to start business alone or a
person with unique skills is needed. More favorable tax treatment. Owners are
personally liable for business debts because not a separate legal entiity.
Question:
3. Corporation
Answer:
Separate legal entity. Owned by stockholders. Investors give the business cash or
other property in exchange for shares of stock. Easier to raise funds because
shares are easier to sell and investors can invest with small amounts of money.
Less favorable tax treatment. Owners are not personally liable for debts.
Question:
4. Accounting
Answer:
The information system that identifies, records, and communicates the economic
events of an organization to interested users.
Question:
5. Internal and External
Answer:
Two types of users
Question:
6. Internal Users
Answer:
Managers who plan, organize, and run the business. Must answer important
questions. Use both internal and financial statements.
, Question:
7. External Users
Answer:
Investors (owners), Creditors (debtors like banks and suppliers), Various others
(taxing authorities, customers, labor unions, and regulatory agencies)
Question:
8. Financial Statements
Answer:
Primary means of communicating with users?
Question:
9. Income statement, Retained Earnings Statement, Balance
Sheet, Statement of Cash Flows
Answer:
Four Financial Statements?
Question:
10. Income Statement
Answer:
Reports revenues and expenses for time period. Indicates how successfully the
business performed during the period.
Question:
11. Retained Earnings Statement
Answer:
indicates how much of previous income was distributed to you and the other
owners of your business in the form of dividends, and how much was retained in
the business to allow for future growth.
Question:
12. The Balance Sheet
Answer:
Reports what a company owns and what it owes at a point in time.
Question:
13. Asset
Answer:
Anything a company owns
QUESTIONS AND CORRECT ANSWERS
Question:
1. Sole Proprietorship
Answer:
Owned by one person. Simple to set up. Owner maintains control. Owners are
liable for business debts because it is not a separate legal entity.
Question:
2. Partnerhsip
Answer:
Two more more people decide to go into business together. Often formed when
one person doesn't have the economic resources to start business alone or a
person with unique skills is needed. More favorable tax treatment. Owners are
personally liable for business debts because not a separate legal entiity.
Question:
3. Corporation
Answer:
Separate legal entity. Owned by stockholders. Investors give the business cash or
other property in exchange for shares of stock. Easier to raise funds because
shares are easier to sell and investors can invest with small amounts of money.
Less favorable tax treatment. Owners are not personally liable for debts.
Question:
4. Accounting
Answer:
The information system that identifies, records, and communicates the economic
events of an organization to interested users.
Question:
5. Internal and External
Answer:
Two types of users
Question:
6. Internal Users
Answer:
Managers who plan, organize, and run the business. Must answer important
questions. Use both internal and financial statements.
, Question:
7. External Users
Answer:
Investors (owners), Creditors (debtors like banks and suppliers), Various others
(taxing authorities, customers, labor unions, and regulatory agencies)
Question:
8. Financial Statements
Answer:
Primary means of communicating with users?
Question:
9. Income statement, Retained Earnings Statement, Balance
Sheet, Statement of Cash Flows
Answer:
Four Financial Statements?
Question:
10. Income Statement
Answer:
Reports revenues and expenses for time period. Indicates how successfully the
business performed during the period.
Question:
11. Retained Earnings Statement
Answer:
indicates how much of previous income was distributed to you and the other
owners of your business in the form of dividends, and how much was retained in
the business to allow for future growth.
Question:
12. The Balance Sheet
Answer:
Reports what a company owns and what it owes at a point in time.
Question:
13. Asset
Answer:
Anything a company owns
