Acct Exam 1 Questions & Answers 2023/2024

Acct Exam 1 Questions & Answers 2023/2024 Who are the internal users of accounting information? - ANSWER-Managers, Administrators, Controllers, Production, Human Resource or Marketing personnel Who are the external users of accounting information? - ANSWER-Lenders, Creditors, Bank loan officers, Investors, Stockholders, Taxing Authorities, Labor Unions, Customers What are the three types of business organization? - ANSWER-sole proprietorship, partnership, corporation sole proprietorship: advantages and disadvantages - ANSWER-Advantages: 1) Simple to setup; 2) total control over the business; 3) favorable tax treatment relative to corporations. Disadvantages: 1) personally liable; 2) difficult to raise money & transfer ownership Partnership: advantages and disadvantages - ANSWER-Advantages: 1) Pool resources & talent; 2) favorable tax treatment relative to corporations. Disadvantages: 1) personally liable; 2) difficult to raise money & transfer ownership Corporation: advantages and disadvantages - ANSWER-Advantages 1) easy to transfer ownership; 2) limited personal liability to investors; 3) easier for corporation to raise funds. Disadvantage: 1) pay higher taxes relative to a sole proprietorship or partnership. When looking at the Balance Sheet and Income Statement, which statement is a picture of the company taken at a specific point in time? - ANSWER-Balance Sheet What is the accounting equation? If liabilities are $120,000 and stockholders' equity is $200,000, what are the total assets? - ANSWER-Assets = Liabilities + Stockholders' Equity 320,000 = 120,000 + 200,000 In what order must the financial statements be prepared? - ANSWER-Income Statement, Retained Earnings, Balance Sheet