ACCT 2000 Exam 1 Lowe-Ardoin Complete
Exam Study Questions with 100% Correct
Answers | Latest Version
1. Which type of business is super easy to establish, only gets taxed once but
the owner is personally liable for everything? - ANSWER Sole
Proprietorship
2. Which type of business is formed between two or more people giving them
broader skills and resources, super easy to establish, only gets taxed once,
but the owners are personal liable for everything? - ANSWER Partnership
3. Which type of business sells stock? - ANSWER Corporation
4. Which type of business can easily share its ownership and raise capital with
no personal liability but gets taxed twice? - ANSWER Corporation
5. What is investing? - ANSWER purchasing resources needed to operate
6. What is operating? - ANSWER daily activities of business
7. Borrowing money from creditors and issuing (selling) shares of stock to
investors are examples of ___________. - ANSWER financing
8. Resources that are owned and used by a business daily (computers,
equipment, delivery trucks) are considered ______________. - ANSWER
investments
,9. A shoe store selling shoes, a dentist cleaning teeth, and a lawn care company
mowing lawns would be examples of ________________ activities. -
ANSWER operating
10.What are the four types of financial statements? - ANSWER income
statement, retained earnings statement, and balance sheet
11.What is the purpose of an income statement? - ANSWER to report revenue
and expenses over a period of time
12.What are the components of an income statement? - ANSWER revenues -
expenses = net income
13.What is the retained earnings statement? - ANSWER reports the net income
retained in the business and any changes in the net income
14.What is the purpose of a balance sheet? - ANSWER reports assets and
claims to assets at a specific point in time
15.What is the equation used for the balance sheet? (accounting equation) -
ANSWER Asset = Liabilities + Stockholder's Equity
16.What are assets? - ANSWER resources owned by a business
17.What are liabilities? - ANSWER amounts owed to creditors/suppliers
18.What is stockholder's equity? - ANSWER Owner's claims to assets
, 19.What is common stock? - ANSWER amounts received from issuing
(selling) shares of stock
20.What are retained earnings? - ANSWER the net income retained in the
business
21.What are dividends? - ANSWER cash payments to stockholders
22.Accounting is the information system that ___________, ___________, and
____________ the economic events of an organization to interested users. -
ANSWER identifies; records; communicates
23.A corporation is a ___________ __________ __________ from its
investors. - ANSWER separate legal entity
24.Which is an advantage of corporations relative to partnerships and sole
proprietorships? - ANSWER reduced legal liability for investors
25.Which forms of business organizations are considered to be separate
accounting entities? - ANSWER Sole Proprietorship, Partnership, and
Corporation
26.Every business, regardless of the form, needs separate _______________
entities. - ANSWER accounting
27.What are the types of users of accounting information? - ANSWER internal
and external
Exam Study Questions with 100% Correct
Answers | Latest Version
1. Which type of business is super easy to establish, only gets taxed once but
the owner is personally liable for everything? - ANSWER Sole
Proprietorship
2. Which type of business is formed between two or more people giving them
broader skills and resources, super easy to establish, only gets taxed once,
but the owners are personal liable for everything? - ANSWER Partnership
3. Which type of business sells stock? - ANSWER Corporation
4. Which type of business can easily share its ownership and raise capital with
no personal liability but gets taxed twice? - ANSWER Corporation
5. What is investing? - ANSWER purchasing resources needed to operate
6. What is operating? - ANSWER daily activities of business
7. Borrowing money from creditors and issuing (selling) shares of stock to
investors are examples of ___________. - ANSWER financing
8. Resources that are owned and used by a business daily (computers,
equipment, delivery trucks) are considered ______________. - ANSWER
investments
,9. A shoe store selling shoes, a dentist cleaning teeth, and a lawn care company
mowing lawns would be examples of ________________ activities. -
ANSWER operating
10.What are the four types of financial statements? - ANSWER income
statement, retained earnings statement, and balance sheet
11.What is the purpose of an income statement? - ANSWER to report revenue
and expenses over a period of time
12.What are the components of an income statement? - ANSWER revenues -
expenses = net income
13.What is the retained earnings statement? - ANSWER reports the net income
retained in the business and any changes in the net income
14.What is the purpose of a balance sheet? - ANSWER reports assets and
claims to assets at a specific point in time
15.What is the equation used for the balance sheet? (accounting equation) -
ANSWER Asset = Liabilities + Stockholder's Equity
16.What are assets? - ANSWER resources owned by a business
17.What are liabilities? - ANSWER amounts owed to creditors/suppliers
18.What is stockholder's equity? - ANSWER Owner's claims to assets
, 19.What is common stock? - ANSWER amounts received from issuing
(selling) shares of stock
20.What are retained earnings? - ANSWER the net income retained in the
business
21.What are dividends? - ANSWER cash payments to stockholders
22.Accounting is the information system that ___________, ___________, and
____________ the economic events of an organization to interested users. -
ANSWER identifies; records; communicates
23.A corporation is a ___________ __________ __________ from its
investors. - ANSWER separate legal entity
24.Which is an advantage of corporations relative to partnerships and sole
proprietorships? - ANSWER reduced legal liability for investors
25.Which forms of business organizations are considered to be separate
accounting entities? - ANSWER Sole Proprietorship, Partnership, and
Corporation
26.Every business, regardless of the form, needs separate _______________
entities. - ANSWER accounting
27.What are the types of users of accounting information? - ANSWER internal
and external
