Ch 1 & 2

Question 1

sole proprietorship

Answer 1

business organization owned by one person- the 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 separate legal entity- owners of corporations (stockholders) are not personally liable for debts of the corporation

Question 4

limited liability company

Answer 4

hybrid business entity that has certain characteristics of both a corporation and a partnership

Question 5

assets= __ + __

Answer 5

liabilities + stockholders’ equity

Question 6

assets (ex)

Answer 6

resources owned by the company that hold value (cash, supplies, furniture, equipment)

Question 7

liabilities (ex)

Answer 7

resources owed to creditors (notes payable, accounts payable)

Question 8

stockholders’ equity

Answer 8

resources owed to stockholders (contributed capital, retained earnings)

Question 9

basic accounting equation

Answer 9

the relationship between assets, liabilities, and stockholders’ equity

Question 10

net income= __ + __

Answer 10

revenues-expenses

Question 11

revenues

Answer 11

inflow of resources or services into a company

Question 12

expenses

Answer 12

outflow of resources from the company

Question 13

dividends

Answer 13

distributions to stockholders

Question 14

parts of a financial statement

Answer 14

1) income statement
2) statement of retained earnings
3) balance sheet
4) statement of cash flows

Question 15

income statement

Answer 15

1) revenues
2) expenses
3) net income

Question 16

statement of retained earnings

Answer 16

1) retained earnings as of __
2) add net income
3) subtract dividends
4) new RE as of __

Question 17

balance sheet

Answer 17

1) assets
2) liabilities
3) stockholders’ equity

Question 18

statement of cash flows

Answer 18

1) CF operating
2) CF investing
3) CF financing
4) change in cash

Question 19

net income flows from the ____ to the ____

Answer 19

income statement → statement of retained earnings

Question 20

ending retained earnings flows from the ____ to the ____

Answer 20

statement of retained earnings → balance sheet

Question 21

cash on the ____ and the cash at the end of the year on the ____ agree

Answer 21

balance sheet, statement of cash flows

Question 22

the systematic accounting process includes

Answer 22

1) analyze2) record3) summarize

Question 23

analyze transactions with a

Answer 23

chart of accounts

Question 24

chart of accounts

Answer 24

account names with corresponding numbers to ensure complete consistency (assets 1, liabilities 2, SHE 3)

Question 25

current ratio=__ / __

Answer 25

current assets/current liabilities

Question 26

the systematic accounting process includes

Answer 26

1) analyze2) record3) summarize

Question 27

analyze transactions with a

Answer 27

chart of accounts

Question 28

chart of accounts

Answer 28

account names with corresponding numbers to ensure complete consistency (assets 1, liabilities 2, SHE 3)

Question 29

current ratio=__ / __

Answer 29

current assets/current liabilities

Question 30

contributed capital

Answer 30

cash received from selling stock

Question 31

retained earnings

Answer 31

money kept within the business

Question 32

dividend

Answer 32

distributions to stockholder

Question 33

the systematic accounting process includes

Answer 33

1) analyze
2) record
3) summarize

Question 34

analyze transactions with a

Answer 34

chart of accounts

Question 35

chart of accounts

Answer 35

account names with corresponding numbers to ensure complete consistency (assets 1, liabilities 2, SHE 3)

Question 36

ledger

Answer 36

keeps track of all transactions affecting an account