ACCOUNTING 211 Liberty University -ACCT 211 Exam 1 well answered

ACCT 211 Exam 1What is the primary purpose of financial accounting? - correct answer To measure business activities of a company and then communicate them to external parties for decision making purposes. Distinguish between managerial and financial accounting. - correct answer +Managerial-Accounting information that is provided for internal users (Managers). +Financial-Accounting information that is provided for external users. Limited liability. - correct answer Prevents stockholders from being held responsible for the financial obligations of the corporation. Flow through taxation. - correct answer +Sole proprietorships and partnerships offer lower taxes compared to corporations. +Sole proprietorships and partnerships are taxed at the owners personal income rates. +Corporation's income is taxed twice. The accounting equation. - correct answer Assets = Liabilities + Stockholder's equity (resources) (Creditor's claims) (Owner's claims) +Illustrates a fundamental model of business valuation What does an asset represent? - correct answer +The resources of a company +Forms of assets: -Cash -Resources