Business Organization and Introduction to Bookkeeping

Question 1

_______ is a business that can be owned and controlled by an individual, a company, or a limited liability partnership.

Answer 1

Sole Proprietorship

Question 2

What are the advantages of Sole Proprietorship?

Answer 2

1. Ease of starting and ending a business
2. You’re the boss
3. Retention of business profits

Question 3

What are the disadvantages of Sole Proprietorship?

Answer 3

1. Unlimited liabilities
2. Limited financial resources
3. Overwhelming time commitment and management difficulties

Question 4

By the contract of _______, two or more people bond themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves.

Answer 4

Partnership

Question 5

What are the advantages of a Partnership

Answer 5

1. Financial resources.
2. Complementary Skills and Knowledge.
3. Greater chance of survival

Question 6

What are the disadvantages of a Partnership?

Answer 6

1. Difficulty of termination
2. Division of profits
3. Disagreement with Partners

Question 7

_______ Is created when a group of shareholders who have ownership of the corporation, are represented by their holding/acquiring of common stock.

Answer 7

Corporation

Question 8

What are the advantages of a Corporation?

Answer 8

1. Limited liability
2. Perpetual life
3. Ability to raise money

Question 9

What are the disadvantages of a Corporation?

Answer 9

1. Initial cost/Investment
2. The difficulty of termination
3. Double taxation

Question 10

Renders service the customers to earn income

Answer 10

Service business

Question 11

Buys merchandise and resells it to the customer.

Answer 11

Merchandise business

Question 12

Transforming raw materials into finished products.

Answer 12

Manufacturing business

Question 13

Transforming raw materials into finished products.

Answer 13

Manufacturing business

Question 14

_______ is the process of recording business transactions in chronological order. _______ is done by a bookkeeper who records the day-to-day activities of a business.

Answer 14

Bookkeeping

Question 15

_______ was regarded as the “Father of Accounting”. He also published the first book on double-entry accounting.

Answer 15

Luca Pacioli

Question 16

_______ are exchanges of values. _______ are money, rights, properties, and services.

Answer 16

Transactions, Values

Question 17

This method may be considered the foundation of recording.

Answer 17

Double-entry bookkeeping method

Question 18

what are the values?

Answer 18

Cash
Merchandise
Service
Obligation to pay
Right to collect
Right to use
Cancellation of Debt

Question 19

_______ are the transactions or an event that directly affects the operation of the business.

Answer 19

Business Transactions

Question 20

_______ are property or rights on property owned by the business. In other words, _______ are anything of value owned by the business.

Answer 20

Assets

Question 21

_______ are the financial obligation or debts owed to people other than the owner.

Answer 21

Liabilities

Question 22

refers to the equity or share of the owner or owners in the property or rights on the property of the business. It is also known as proprietorship or capital.

Answer 22

Owner’s Equity