College Accounting A Practical
Approach Chapter 1 Terms Questions
and Answers.
Sole proprietorship - Answer Owned by one person
Partnership - Answer Owned by 2 or more people
Corporation - Answer Owned by stockholders
LLC - Answer Owned by a limited number of members
Sarbanes-Oxley Act - Answer Helps prevent fraud at publicly-held companies
The basic accounting equation - Answer Accountants divide the equities into two parts; the
claim of creditors labeled liabilities & the claim of business labeled owner's equity
(Assets = Liabilities + Owners Equity)
The relationship between assets & equities - Answer Assets = Equities
(total value (total claims
items owned against the assets)
by business)
The expanded accounting equation - Answer Assets = Liabilities + Owner's Capital - Owner's
Drawings + Revenues - Expenses
Assets - Answer Properties of value owned by a business; cash, land, supplies, office
equipment, buildings, & other properties of value
Liabilities - Answer Amounts owed to creditors
Equities - Answer Rights of financial claims to the assets
Capital - Answer The owner's investment in a company does not always mean cash, includes
any assets the owner has put into the business
Approach Chapter 1 Terms Questions
and Answers.
Sole proprietorship - Answer Owned by one person
Partnership - Answer Owned by 2 or more people
Corporation - Answer Owned by stockholders
LLC - Answer Owned by a limited number of members
Sarbanes-Oxley Act - Answer Helps prevent fraud at publicly-held companies
The basic accounting equation - Answer Accountants divide the equities into two parts; the
claim of creditors labeled liabilities & the claim of business labeled owner's equity
(Assets = Liabilities + Owners Equity)
The relationship between assets & equities - Answer Assets = Equities
(total value (total claims
items owned against the assets)
by business)
The expanded accounting equation - Answer Assets = Liabilities + Owner's Capital - Owner's
Drawings + Revenues - Expenses
Assets - Answer Properties of value owned by a business; cash, land, supplies, office
equipment, buildings, & other properties of value
Liabilities - Answer Amounts owed to creditors
Equities - Answer Rights of financial claims to the assets
Capital - Answer The owner's investment in a company does not always mean cash, includes
any assets the owner has put into the business
