Basics

Question 1

Sole Proprietorship

Answer 1

Business organization owned by one person. Owner is personally liable for all debts of the business

Question 2

Partnership

Answer 2

Business organization owned by two or more people. Each partner is personally liable for all debts of the business.

Question 3

Corporation

Answer 3

A seperate legal entity. Owners of stock are not personably liable for debts of the corporation.

Question 4

Who are external users?

Answer 4

creditors and investors

Question 5

Internal users

Answer 5

managers and supervisors

Question 6

Basic accounting equation

Answer 6

Assets=liabilities+stockholders equity

Question 7

Assets

Answer 7

Resources the company controls and expects to benefit from in the future.

Question 8

What accounts are assets?

Answer 8

Cash, accounts receivable, inventory, etc

Question 9

Are assets debit or credit?

Answer 9

Debit

Question 10

Liabilities

Answer 10

Measurable amounts that the company expects to give up in the future to settle what it presently owes to creditors

Question 11

What accounts are liabilities?

Answer 11

Notes payable, accounts receivable, unearned revenue

Question 12

Are liabilities debits or credits?

Answer 12

Credits

Question 13

Stockholders equity

Answer 13

Owner’s claims to the business resources

Question 14

What accounts are stockholders equity

Answer 14

Common stock, retained earnings

Question 15

Net Income Equation

Answer 15

revenues-expenses=net income

Question 16

Revenues

Answer 16

Sales of goods or services to customers, measured at the amount the business charges the customer.

Question 17

Expenses

Answer 17

The cost of doing business necessary to earn revenues, including wages to employees, advertising, insurance, utilities, and supplies used in office.

Question 18

Dividends

Answer 18

Distribution of a company’s earnings to its stockholders as a return on their investments.

Question 19

Are dividends an expense?

Answer 19

No