BUS 241 Test 1 Review (updated)
questions n answers
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)
questions n answers
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)
