1a. Introduction To Accounting

Question 1

What is Accounting?

Answer 1

The process of recording, summarising, analysing and interpreting financial (money-related) activities to permit individuals and organisations to make informed judgements and decisions.

Question 2

By law, what must all business do?

Answer 2

Keep accounting records. (Regardless of if the company is profit or non-profit)

Question 3

What are the different FORMS of business organisation? (And what are they)

Answer 3

PRIVATE BUSINESS - object is to earn a profit
SOLE PROPRIETORSHIP - owned by one person
PARTNERSHIP - co-owned by 2 or more persons
CORPORATION - owned by investors called stockholders (the business - not the owners - are responsible for the company’s obligations)

Question 4

What are the different TYPES of business organisations? (And what are they)

Answer 4

SERVICE BUSINESS - doctors, lawyers, barber shop etc
MERCHANDISING BUSINESS - purchase goods for resale
MANUFACTURING BUSINESS - produces a product to sell