ACCOUNTING AIAF114 EXAM
QUESTIONS WITH VERIFIED ANSWERS
CORPORATION - ANSWER-A business organized as a separate legal entity under
state corporation
law and having ownership divided into transferable shares of stock
The holders of the shares (stockholders) enjoy limited liability;
that is, they are not personally liable for the debts of the corporate entity. Stockholders
may transfer all or part of their ownership shares to other investors
at any time
ownership can
be transferred without dissolving the corporation, the corporation enjoys an unlimited life
Assets - ANSWER-are the resources a business owns.
liabilities. - ANSWER-Claims of those to whom the company owes money (creditors)
owner's equity - ANSWER-Claims of owners are called
basic accounting equation - ANSWER-Assets must equal the
sum of liabilities and owner's equity.
Investments by owner - ANSWER-are the assets the owner puts
into the business. These investments increase owner's equity. They are recorded
in a category called owner's capital
REVENUES - ANSWER-the gross increase in owner's equity resulting from
business activities entered into for the purpose of earning income
DRAWINGS - ANSWER-determine the total withdrawals
for each accounting period.
Drawings decrease owner's equity
Expenses - ANSWER-are the cost of assets consumed or services used in the process
of earning revenue. They are decreases in owner's equity that result from
operating the business.
Transactions - ANSWER-are a business's economic events recorded by
accountants.
time period
assumption - ANSWER-accountants divide the economic life of a business into artifi cial
time periods
QUESTIONS WITH VERIFIED ANSWERS
CORPORATION - ANSWER-A business organized as a separate legal entity under
state corporation
law and having ownership divided into transferable shares of stock
The holders of the shares (stockholders) enjoy limited liability;
that is, they are not personally liable for the debts of the corporate entity. Stockholders
may transfer all or part of their ownership shares to other investors
at any time
ownership can
be transferred without dissolving the corporation, the corporation enjoys an unlimited life
Assets - ANSWER-are the resources a business owns.
liabilities. - ANSWER-Claims of those to whom the company owes money (creditors)
owner's equity - ANSWER-Claims of owners are called
basic accounting equation - ANSWER-Assets must equal the
sum of liabilities and owner's equity.
Investments by owner - ANSWER-are the assets the owner puts
into the business. These investments increase owner's equity. They are recorded
in a category called owner's capital
REVENUES - ANSWER-the gross increase in owner's equity resulting from
business activities entered into for the purpose of earning income
DRAWINGS - ANSWER-determine the total withdrawals
for each accounting period.
Drawings decrease owner's equity
Expenses - ANSWER-are the cost of assets consumed or services used in the process
of earning revenue. They are decreases in owner's equity that result from
operating the business.
Transactions - ANSWER-are a business's economic events recorded by
accountants.
time period
assumption - ANSWER-accountants divide the economic life of a business into artifi cial
time periods
