BUS 241 Test 1 Review Question and
answers verified to pass 2025/2026
Is accounting an information system? If so, what is its function? - correct answer ✔Yes, it is a system. It
collects, records, and summarizes information.
Know the three types of businesses. Be able to identify specific businesses as one of the three. - correct
answer ✔Service, Merchandise and Manufacturing.
Know the four ways to organize a business and their order - correct answer ✔Proprietorship --->
Partnership ---> LLC ---> Corporation
Proprietorship - correct answer ✔One owner business, biggest disadvantage is tat there is no end to
liability and it is hard to raise $$$. Most businesses are this.
Partnership - correct answer ✔Two or more owners, with one being the general owner.
LLC (Limited Liability Company) - correct answer ✔combines the attributes of a partnership and a
corporation
Corporation - correct answer ✔A business owned by stockholders who share in its profits but are not
personally responsible for its debts. (generates ~90% of business revenue.)
Know the difference between financial accounting and managerial accounting, including users of the
different accounting information. - correct answer ✔Managerial Primarily deals with internal users.
(managers, employees.)
Financial Accounting: Primarily deals with external users. (customers, investors, creditors, government)
, What is a Certified Public Accountant? What is the difference between a Certified Public Accountant and
a Certified Management Accountant? - correct answer ✔Certified Public Accountant: can do services
for the public and charge fees.
Certified Management Accountant: Works for a corporation or a business.
What do the following terms mean? GAAP, FASB, SEC. - correct answer ✔GAAP: Generally Accepted
Accounting Principles.
FASB: Financial Accounting Standards Board.
SEC: Securities and Exchange Commission.
Define the following: separate entity concept, unit of measure concept, cost concept, matching principle
- correct answer ✔Separate Entity Concept: Keep business records and personal records separate.
Unit of Measure Concept: When looking at financial records, all money must be in US Dollars
Cost Concept: Amounts are initially recorded in the accounting records at their cost or purchase price
Matching Principle: Matching revenues and expenses.
What is the basic accounting equation? - correct answer ✔Assets = Liabilities + Owners' Equity
(A=L=OE)
How does the payment of cash on an account owed effect the basic accounting equation? - correct
answer ✔Cash (an asset) is increased with a debit.
answers verified to pass 2025/2026
Is accounting an information system? If so, what is its function? - correct answer ✔Yes, it is a system. It
collects, records, and summarizes information.
Know the three types of businesses. Be able to identify specific businesses as one of the three. - correct
answer ✔Service, Merchandise and Manufacturing.
Know the four ways to organize a business and their order - correct answer ✔Proprietorship --->
Partnership ---> LLC ---> Corporation
Proprietorship - correct answer ✔One owner business, biggest disadvantage is tat there is no end to
liability and it is hard to raise $$$. Most businesses are this.
Partnership - correct answer ✔Two or more owners, with one being the general owner.
LLC (Limited Liability Company) - correct answer ✔combines the attributes of a partnership and a
corporation
Corporation - correct answer ✔A business owned by stockholders who share in its profits but are not
personally responsible for its debts. (generates ~90% of business revenue.)
Know the difference between financial accounting and managerial accounting, including users of the
different accounting information. - correct answer ✔Managerial Primarily deals with internal users.
(managers, employees.)
Financial Accounting: Primarily deals with external users. (customers, investors, creditors, government)
, What is a Certified Public Accountant? What is the difference between a Certified Public Accountant and
a Certified Management Accountant? - correct answer ✔Certified Public Accountant: can do services
for the public and charge fees.
Certified Management Accountant: Works for a corporation or a business.
What do the following terms mean? GAAP, FASB, SEC. - correct answer ✔GAAP: Generally Accepted
Accounting Principles.
FASB: Financial Accounting Standards Board.
SEC: Securities and Exchange Commission.
Define the following: separate entity concept, unit of measure concept, cost concept, matching principle
- correct answer ✔Separate Entity Concept: Keep business records and personal records separate.
Unit of Measure Concept: When looking at financial records, all money must be in US Dollars
Cost Concept: Amounts are initially recorded in the accounting records at their cost or purchase price
Matching Principle: Matching revenues and expenses.
What is the basic accounting equation? - correct answer ✔Assets = Liabilities + Owners' Equity
(A=L=OE)
How does the payment of cash on an account owed effect the basic accounting equation? - correct
answer ✔Cash (an asset) is increased with a debit.
