ACC 2301 Study Guide - Midterm Guide: Sole Proprietorship, Financial Statement, Retained Earnings

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emilypena887

22 Nov 2021

School

UHD

Department

Accounting

Course

ACC 2301

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Document Summary

Understand the business activities that are measured in financial accounting. Determine how accounting information is communicated through financial statements. Definition: account information that is provided to external users. Communicate measurements to external parties for decision-making purposes. Corporations: legally separated from owners and for stockholders, it comes with the advantage of having limited liability; meaning they will not be held personally responsible for financial obligations and will not lose any personal assets. Sole proprietorship: business owned by one person and there are no outside investors. This comes with the disadvantage of having insufficient funds so you can not finance your business, borrow money, and have no limited liability. Partnership: business owned by two or more people. Financing: include the transactions company has with investors and creditors. Investing: include transactions involving purchase/ sale of resources expecting to benefit the company. Operating: transactions relating to operations of a company. Amounts recognized when a company sells products or provide services.

Related Questions

QUESTION 1 The knowledge of financial accounting can assist people with decisions such as whether to extend credit to a business. True False 0.2 points Saved QUESTION 2 Employees of a company would not have a reason to use the information provided by financial accounting. True False 0.2 points Saved

QUESTION 3 Financial accounting should be used for assessing the financial health of large organizations only. True False 0.2 points Saved

QUESTION 4 Financial accounting can be helpful for a job candidate who is assessing the financial future of a potential employer. True False 0.2 points Saved QUESTION 5 Lenders might use the information produced by financial accounting when making loan decisions. True False 0.2 points Saved

QUESTION 6 Credit analysts prefer not to use information provided by financial accounting, as it is not accurate. True False 0.2 points Saved

QUESTION 7 Financial accounting is helpful to investment advisors. True False 0.2 points Saved

QUESTION 8 Financial accounting is more useful than managerial accounting. True False 0.2 points Saved

QUESTION 9 The decision to buy or rent equipment is an example of a decision aided by managerial accounting. True False 0.2 points Saved

QUESTION 10 Which of the following statements is true of financial accounting? A. It is used by external parties to make investment decisions. B. It is used to make lease or purchase decisions. C. Managerial accounting is another name for financial accounting, D. It is primarily used to make internal decisions of a business. E. The effectiveness of advertising can be judged using financial accounting. 0.2 points Saved QUESTION 11 The charge for using money over time, often associated with long-term loans, is known as: A. interest. B. principal. C. distribution charge. D. cash dividend. E. preferred dividend. 0.2 points Saved QUESTION 12 Which of the following is a common feature of financial and managerial accounting? A. Both have same objectives B. Both are prepared according to U.S. GAAP C. Both are reported at year end in the annual report D. Both are analyzed by external users while making investment decisions E. Both are used by the management in making decisions 0.2 points Saved

QUESTION 13 Dividends are required to be paid to stockholders on an annual basis. True False 0.2 points Saved

QUESTION 14 An individual who owns one or more shares of stock in a corporation is an owner of that corporation. True False 0.2 points Saved

QUESTION 15 Corporations do not exist as separate legal entities apart from their owners. True False 0.2 points Save Answer

QUESTION 16 It is very difficult to buy or sell ownership shares of a corporation in a stock exchange. True False 0.2 points Saved

QUESTION 17 Stock markets match up investors who wish to buy shares with those who wish to sell them. True False 0.2 points Saved

QUESTION 18 Legal process by which owners of an organization apply to a state government to have it identified as an entity legally separate from its owners is called: A. stocking. B. filling. C. attributing. D. registration. E. incorporation. 0.2 points Saved

QUESTION 19 An advantage of ownership in a sole proprietorship over ownership in a corporation is: A. tax benefits. B. having a board of directors. C. the ability to raise capital through issuance of stock. D. separation of owner and business as legal entities. E. limited liability for debts. 0.2 points Saved

QUESTION 20 Who hires the management of a corporation? A. Stockholders B. Board of directors C. Creditors D. Government E. SEC 0.2 points Saved QUESTION 21 Inventory refers to the: A. excess amount paid for an asset over its fair value. B. intangible assets of a business. C. merchandise bought or manufactured for the purpose of selling. D. amount of net income reinvested by company for future operations. E. revenue generated from investment. 0.2 points Saved QUESTION 22 Investors use financial information to predict whether a: A. company will recruit more employees. B. company's stock price will increase C. company has invested in buildings. D. company will pay salaries. E. company's bond price will increase. 0.2 points Saved

QUESTION 23 Financial accounting can be compared to a portrait. True False 0.2 points Saved

QUESTION 24 Financial statements provide the form and structure for the conveyance of financial information that will create a likeness of the reporting organization. True False 0.2 points Saved

QUESTION 25 The information reported in financial statements must be exact for an investor to make any decision. True False 0.2 points Saved

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The Financial Accounting Standards Board has developed a conceptualframework for financial accounting and reporting. The FASB hasissued seven Statements of Financial Accounting Concepts.

These statements set forth objectives and fundamentals that will bethe basis for developing financial accounting and reportingstandards. The objectives identify the goals and purposes offinancial reporting. The fundamentals are the underlying conceptsof financial accounting concepts that guide the selection oftransactions, events, and circumstances to be accounted for; theirrecognition and measurement; and the means of summarizing andcommunicating them to interested parties.

The purpose of Statement of Financial Accounting Concepts No. 2,"Qualitative Characteristics of Accounting Information," is toexamine the characteristics that make accounting informationuseful. The characteristics or qualities of information discussedin Concepts No. 2 are the ingredients that make information usefuland are the qualities to be sought when accounting choices aremade.

What is the most important quality for accounting information asidentified in Statement of Financial Accounting Concepts No. 2?Explain why it is the most important.

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19. What of the following is not consistent with the primary purpose of financial accounting? A. To provide the SEC audited financial statements on a quarterly and annual basis. B. To provide investors with relevant information to use in decision making. C. To provide financial institutions with information relevant to lending decisions. D. All of the above are consistent with the purpose of financial accounting.

ACC 2301 Study Guide - Midterm Guide: Sole Proprietorship, Financial Statement, Retained Earnings

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