LO 1-2 Identity Reporting Entities Flashcards
How accounting transactions are recorded will vary depending on the entity perspective taken. This statement is
true
The three primary types of reporting entities are consumers, resource owners, and businesses.
true
John Hamilton borrowed $500,000 from Stone Creek Bank to open a new restaurant called Sauce-It-Up. John transferred $450,000 of the cash he borrowed to the restaurant on the first day of the year. How many reporting entities exist in this scenario?
3 reporting entities
John Hamilton borrowed $500,000 from Stone Creek Bank to open a new restaurant called Sauce-It-Up. John transferred $450,000 of the cash he borrowed to the Company on the first day of the year. Which of the following appropriately reflects the cash transactions between these reporting entities?
John Hamilton- 50,000 increase
Sauce-it-up - $450,000 increase
Stone Creek Bank- $500,000 decrease
Ellen Elder and her brother, Buster started Elder Company when they each invested $600 in the company. After the investments there will be
3 reporting entities
reporting entities
people or businesses an accountant reports on
by separating entities the corporation is able to
attract people to invest in the company
in the case of separate entities the owners is only liable for
the money they invest in the company.
the entity would be liable, not the owners
A note is essentially an
I owe you
each entity has its own
accounting system
business is a separate and legal entity from
the owners
owners/investors are their
own reporting entities
by separating owners from business you attract
investors and more money
entities are _______ not owners
liable
always take perspective of ________
business, not the customers
