CSU ACT 205 Exam 1 answers new year 2024 with complete solution

Type of Business Organization - Answer-Sole Proprietorship -Simple to establish -owner controlled -tax advantages Type of Business Organization - Answer-Partnerships -simple to establish -shared control -broader skills and resources -tax advantages Type of Business Organization - Answer-Corporations -easier to transfer ownership -easier to raise funds -no personal liability Primary users of accounting information - Answer-internal and external internal users - Answer-The organization's executives, managers, other employees external users - Answer-investors (i.e., stockholders), creditors (i.e., lenders), regulatorsinternal users --> managerial accounting - Answer-Focuses on the methods accountants use to provide information to the organization's internal users external users --> Financial accounting - Answer-Deals with: 1) measuring business activities; and 2) communicating those measurements to the organization's external users One type of business activity - Answer-Financing Activities -Raising the funds to start the business One type of business activity - Answer-Operating Activities -Generating income (profit) via sales and services One type of business activity - Answer-Investing Activities -Buying resources (assets) Cash transactions related to financing activities - Answer-Cash transactions related to long-term debt and equity. EX: -Cash received from issuance of shares of common stock -Cash paid for dividends-Cash received from a loan -Cash paid to reduce loan principal Cash transactions related to investing activities - Answer-Cash transactions related to long-term assets. Examples: -Cash paid to buy equipment -Cash received from sale of equipment Cash transactions related to operating activities - Answer-Cash transactions related to primary business purpose. Examples: -Cash received from sale of inventory -Cash paid to buy inventory -Cash paid for salaries Two primary sources of outside funds - Answer-Borrowing money (debt) & Issuing (selling) shares of stock for cash (equity) Amounts owed - Answer-Liabilities party to whom amounts are owed - Answer-creditors Term used to describe the amount paid by stockholders for shares they purchase. - Answer-common stock Payments to stock holders - Answer-DividendsPurchase of resources a company needs to operate (computers, delivery trucks, etc.) - Answer-investing activities resources owned by a business - Answer-Assets Amounts earned from the sale of products and other sources (sales revenue, service revenue, interest revenue) - Answer-Revenue goods available for sale to customers - Answer-Inventory Right to receive money from a customer as the result of a sale - Answer-Accounts receivable The cost of assets consumed or services used in the process of generating revenues. - Answer-Expenses when revenues exceed expenses - Answer-Net income When expenses exceed revenues Revenues minus expenses - Answer-Net loss Represents the cumulative amount of net income, earned over the life of the company, that has been kept (retained) in the business rather than distributed as dividends. - AnswerRetained Earnings Remainder of assets after deducting liabilities - Answer-Stockholders' Equity ___________________ = Operating cash flows + Investing cash flows + Financing cash flows - AnswerChange in cashChange in cash = ________________________ + Investing cash flows + Financing cash flows - AnswerOperating cash flows Change in cash = Operating cash flows + ___________________________ + Financing cash flows - Answer-Investing cash flows Change in cash = Operating cash flows + Investing cash flows + ___________________________ - Answer-financing cash flows Amounts due to others for purchases on credit; usually are informal agreements to pay and the firm does not pay interest - Answer-Accounts payable Amounts earned by employees during the period - Answer-Wages Expense Amounts due to employees for wages they have earned, but have not yet been paid - Answer-Wages payable Assets that are expected to be converted into cash, sold, or consumed within the next year. Examples: Cash, A/R, Investments, Supplies, Prepaid Expense - Answer-Current Assets Any asset not classified as current.Examples: Equipment, Buildings, Patents. - Answer-Long-Term Assets Liabilities that are due within the next year Examples: A/P, Taxes Payable, Deferred Revenue, shortterm portion of Notes Payable - Answer-Current Liabilities Any liability not classified as current. Examples: long-term portion of Notes Payable - Answer-Long-Term Liabilities current assets - current liabilities - Answer-Working Capital