ACCOUNTING 201 EXAM 1 WITH
ACCURATE SOLUTIONS
Sole JProprietorship J- Jcorrect Janswers J-business Jowned Jby Jone Jperson
simple Jto Jestablish
owner Jcontrolled
tax Jadvantages
owner Jpersonally Jliable
financially Jdifficult
Partnership J- Jcorrect Janswers J-2 Jor Jmore Jowners J
simple Jto Jestablish
shared Jcontrol
broader Jskills Jand Jresources J
tax Jadvantages J
personally Jliable
Corporation J- Jcorrect Janswers J-separate Jlegal Jentity Jowned Jby Jstockholders J
easy Jto Jtransfer Jownership
greater Jcapital Jraising Jpotential J
unfavorable Jtax Jtreatment J
lower Jlegal Jliabilities Jfor Jowners
, Internal JUsers Jof JFinancial JInfo J- Jcorrect Janswers J-Managers J
-Finance Jborrow J$ Jor Jissue Jstock?
-Marketing Jadvertising Jcosts J
-HR Jhire Jor Jlay Joff Jppl?
-Management Jexpand Jbusi? Jsell Joff Jparts?
External JUsers Jof JFinancial JInfo J- Jcorrect Janswers J--Investors Jwho Jshould JI
Jinvest Jin? J
-Creditors Jshould JI Jloan Jthem J$? J
-Others Jregulatory Jagencies, Jtax Jauthorities, Jcustomers, Jlabor
Types Jof JBusiness JActivities J- JFinancing J- Jcorrect Janswers J-get Jlarge Jsums Jof
J$ Jfrom J2 Jsources: J
1. JCreditors- Jborrowing Jcreates Jliabilities(things Jthe Jcompany Jowes)
2. JOwners- Jselling/issuing Jstock Jto Jshareholders(shareholders Jequity-how Jmuch
Jof Ja Jcompany Ja Jstockholder Jowns)
Types Jof JBusiness JActivities J- JInvesting J- Jcorrect Janswers J-obtaining
Jresources Jor Jassets(things Jthat Jhave Jvalue Jto Jthe Jcompany) Jto Joperate Ja
Jbusiness
e.g. Jbuying Jand Jselling Jland, Jbuildings, Jequipment, Jvehicles
Types Jof JBusiness JActivities J- JOperating J- Jcorrect Janswers J-primary Jactivities
Jof Jbusiness J- Jnormal Jactivities Jthe Jcompany Jperforms Jto Jrun Jtheir Jbusiness
e.g. Jselling Jgoods, Jproviding Jservices, Jpaying Jemployees, Jadvertising, Jpaying
Jutilities J
1. JRevenues J- Jincrease Jassets Jresulting Jfrom Jthe Jsale Jof Jg&s J
2. JExpense J- Jcost Jof Jassets Jconsumed Jor Jservices Jused Jto Jgenerate Jrevenue
Accounting J- Jcorrect Janswers J-info Jsystem Jthat Jidentifies, Jrecords, Jand
Jcommunicates Jthe Jeconomic Jevents Jof Jan Jorganization Jto Jinterested Jusers. J
uses J4 Jfinancial Jstatements
Income JStatement J- Jcorrect Janswers J-reports Joperating Jsuccess Jor Jfailure Jfor
Ja Jperiod Jof Jtime J
summarizes Jrevenues Jand Jexpenses
Statement Jof JRetained JEarnings J- Jcorrect Janswers J-income Jthe Jcompany Jhas
Jearned Jover Jits Jlife Jand Jkept Jin Jthe Jcompany J(not Jpaid Jto Jowners Jin
Jdividends)
over Ja Jperiod Jof Jtime
Balance JSheet J- Jcorrect Janswers J-reports Jasses Jand Jclaims Jto Jassets Jat Jone
Jpoint Jin Jtime J
assets- Jresources Jowned Jby Jthe Jcompany J
=cash, Ja/r, Jinventory, Jinvestments, Jfurniture, Jequipment, Jand Jsupplies
liabilities- Jobligations Jor Jdebts Jof Jthe Jcompany J
=a/p(verbal Jpromise Jto Jpay), Jn/p(written Jpromise Jto Jpay), Jinterest Jpayable(we
Jowe Jinterest Jfrom Jborrowing J$), Jsalaries Jpayable, Junearned Jrevenue J
ACCURATE SOLUTIONS
Sole JProprietorship J- Jcorrect Janswers J-business Jowned Jby Jone Jperson
simple Jto Jestablish
owner Jcontrolled
tax Jadvantages
owner Jpersonally Jliable
financially Jdifficult
Partnership J- Jcorrect Janswers J-2 Jor Jmore Jowners J
simple Jto Jestablish
shared Jcontrol
broader Jskills Jand Jresources J
tax Jadvantages J
personally Jliable
Corporation J- Jcorrect Janswers J-separate Jlegal Jentity Jowned Jby Jstockholders J
easy Jto Jtransfer Jownership
greater Jcapital Jraising Jpotential J
unfavorable Jtax Jtreatment J
lower Jlegal Jliabilities Jfor Jowners
, Internal JUsers Jof JFinancial JInfo J- Jcorrect Janswers J-Managers J
-Finance Jborrow J$ Jor Jissue Jstock?
-Marketing Jadvertising Jcosts J
-HR Jhire Jor Jlay Joff Jppl?
-Management Jexpand Jbusi? Jsell Joff Jparts?
External JUsers Jof JFinancial JInfo J- Jcorrect Janswers J--Investors Jwho Jshould JI
Jinvest Jin? J
-Creditors Jshould JI Jloan Jthem J$? J
-Others Jregulatory Jagencies, Jtax Jauthorities, Jcustomers, Jlabor
Types Jof JBusiness JActivities J- JFinancing J- Jcorrect Janswers J-get Jlarge Jsums Jof
J$ Jfrom J2 Jsources: J
1. JCreditors- Jborrowing Jcreates Jliabilities(things Jthe Jcompany Jowes)
2. JOwners- Jselling/issuing Jstock Jto Jshareholders(shareholders Jequity-how Jmuch
Jof Ja Jcompany Ja Jstockholder Jowns)
Types Jof JBusiness JActivities J- JInvesting J- Jcorrect Janswers J-obtaining
Jresources Jor Jassets(things Jthat Jhave Jvalue Jto Jthe Jcompany) Jto Joperate Ja
Jbusiness
e.g. Jbuying Jand Jselling Jland, Jbuildings, Jequipment, Jvehicles
Types Jof JBusiness JActivities J- JOperating J- Jcorrect Janswers J-primary Jactivities
Jof Jbusiness J- Jnormal Jactivities Jthe Jcompany Jperforms Jto Jrun Jtheir Jbusiness
e.g. Jselling Jgoods, Jproviding Jservices, Jpaying Jemployees, Jadvertising, Jpaying
Jutilities J
1. JRevenues J- Jincrease Jassets Jresulting Jfrom Jthe Jsale Jof Jg&s J
2. JExpense J- Jcost Jof Jassets Jconsumed Jor Jservices Jused Jto Jgenerate Jrevenue
Accounting J- Jcorrect Janswers J-info Jsystem Jthat Jidentifies, Jrecords, Jand
Jcommunicates Jthe Jeconomic Jevents Jof Jan Jorganization Jto Jinterested Jusers. J
uses J4 Jfinancial Jstatements
Income JStatement J- Jcorrect Janswers J-reports Joperating Jsuccess Jor Jfailure Jfor
Ja Jperiod Jof Jtime J
summarizes Jrevenues Jand Jexpenses
Statement Jof JRetained JEarnings J- Jcorrect Janswers J-income Jthe Jcompany Jhas
Jearned Jover Jits Jlife Jand Jkept Jin Jthe Jcompany J(not Jpaid Jto Jowners Jin
Jdividends)
over Ja Jperiod Jof Jtime
Balance JSheet J- Jcorrect Janswers J-reports Jasses Jand Jclaims Jto Jassets Jat Jone
Jpoint Jin Jtime J
assets- Jresources Jowned Jby Jthe Jcompany J
=cash, Ja/r, Jinventory, Jinvestments, Jfurniture, Jequipment, Jand Jsupplies
liabilities- Jobligations Jor Jdebts Jof Jthe Jcompany J
=a/p(verbal Jpromise Jto Jpay), Jn/p(written Jpromise Jto Jpay), Jinterest Jpayable(we
Jowe Jinterest Jfrom Jborrowing J$), Jsalaries Jpayable, Junearned Jrevenue J
