Chapter 1

Question 1

What are the 3 forms of business organization?

Answer 1

Sole Proprietorship, Partnership and Coorporation

Question 2

What is(are) the form(s) of business organization that has (have) : simple establish?

Answer 2

Sole Proprietorship and Paternship

Question 3

What is(are) the form(s) of business organization that has (have): owner-controlled

Answer 3

Sole proprietorship

Question 4

What is(are) the form(s) of business organization that has (have): tax advantages?

Answer 4

Sole Proprietorship and Partnership

Question 5

What is(are) the form(s) of business organization that has (have): shared control?

Answer 5

Partnership

Question 6

What is(are) the form(s) of business organization that has (have): broder skills and resources ?

Answer 6

Partnership

Question 7

What is(are) the form(s) of business organization that has (have): easier to transfer ownership?

Answer 7

corporation

Question 8

What is(are) the form(s) of business organization that has (have):easier to raise funds?

Answer 8

corporation

Question 9

What is(are) the form(s) of business organization that has (have): no personal liability

Answer 9

corporation

Question 10

What groups of people are found in internal users?

Answer 10

Finance, marketing, management and human resources

Question 11

What type of internal users it is ?
Is cash sufficient to pay dividends to Microsoft stockholders?

Answer 11

Finance

Question 12

What type of internal users it is ?
What price should Apple charge for an iPhone to maximize the company’s net income?

Answer 12

Marketing

Question 13

What type of internal users it is ?
Which PepsiCo product line is the most profitable? Should any product lines be eliminated?

Answer 13

Management

Question 14

What type of internal users it is ?
Can General Motors afford to give its employees pay raises this year?

Answer 14

Human Resources

Question 15

What groups of people are found in external users?

Answer 15

Investors and creditors

Question 16

What type of external users it is ?
Is General Electric earning satisfactory income?

Answer 16

investors

Question 17

What type of external users it is ?
Will United Arilines be able to pay its debts as they come due?

Answer 17

Creditors

Question 18

What type of external users it is ?
How does Disney compare in size and profitability with Time Warner?

Answer 18

Investors

Question 19

What are the 3 ways to solve an ethical dilemma (ethics in financial reporting)?

Answer 19

1-Recognize an ethical situation and the ethical issues involved
2-Identify and analyze the principal elements in the situation
3-Identify the alternatives, and weigh the impact of each alternative on various stakeholders.

Question 20

Which of the following did not result from the sarbanes-Oxley Act?
-Top management must now certifu the accuracy of financial information
-Penalities for fraudulent activity increased
-Independence of auditors increase
-Tax rates on coprorations increased

Answer 20

Tax rates on corporations increasedé

Question 21

What are the 3 types of activity that all business are involved ?

Answer 21

Financing, Investing and Operating

Question 22

What that keeps track of the results of each of these business activities (financing, investing and operating?

Answer 22

Accounting information system

Question 23

What are the two primary sources of outside funds ?

Answer 23

-Borrowing money (debt)
-Issuing (selling) shares of stock for cash (equity)

Question 24

What are liabilities ?

Answer 24

Amounts owed.
When operating activities, liabilites arising from expenses, they could be accounts payble, interest oayable, wages payable, sales taxes payables and income taxes payable.

Question 25

What are creditors?

Answer 25

Party to whom amounts are owed (liabilities)

Question 26

What are notes payable and bonds payable ?

Answer 26

Different types of liabilities

Question 27

What is common stock?

Answer 27

Term used to describe the amount paid by stockholders for shares they purchase.

Question 28

What are dividends?

Answer 28

Payments to stockholders

Question 29

What describe the financing activities?

Answer 29

Borrowing money (debt) and issuing (selling) shares of stock for cash (equity) which are the two primary sources of outside funds.

Question 30

What are the investing activities?

Answer 30

Are the purchase of resources a compagny needs to operate :
-computers, delivery trucks, furniture, buildings
-assets
-investements

Question 31

What are assets?

Answer 31

Resources owned by a business

Question 32

What are operating activities ?

Answer 32

Once a businees has the assets it needs, it can begin its operations.
It includes revenue, supplies, inventory, accounts receivable, expenses, net income, net loss and liabilities arising frome exepenses

Question 33

What are supplies?

Answer 33

Assets used in day-to-day operations (rather than sold to customers)

Question 34

What is an inventory?

Answer 34

Goods available for sale to customers

Question 35

What accounts receivable ?

Answer 35

Right to receive money from a customer as the result of sale.

Question 36

What are expenses?

Answer 36

Cost of assets consumed or services used (cost of goods sold, selling, marketing, administrative, interest, and income taxes expense)

Question 37

What is a net income?

Answer 37

When revenues exceed expenses.

Question 38

What is a net loss?

Answer 38

When expenses exceed revenues.

Question 39

What are the four financial statements?

Answer 39

-Income statement
-Retained Earnings Statement
-Balance Sheet
-Statement of Cash Flows

Question 40

What is an income statement? What its contains?

Answer 40

-Reports revenues and expenses for a specific period of time
-has net income and net loss
-past net income provides informations for predicting future earnings