Financial Accounting Chapters 1-4 Exam
Questions And Answers
Managerial Accounting
-Provides information for internal decision makers
-Managers
-Individual business owners
Audits To provide reliable information, the SEC requires companies to have their
financial statements audited by indepe...
- life of organization limited by owner's choice/death
- owner is personally liable
2) Partnerships
- 2 or more owners
- life limited by owner's choice/death
- partners are personally liable
3) Corporations
- owned by stockholders
- life is indefinite
- stockholders not personally liable
4) Limited Liability
- owned by members
- life is indefinite
- member are not personally liable
, Financial Accounting Chapters 1-4 Exam
Questions And Answers
Stock - refers to ownership of a company
- split into "shares"
- owners of stock = "stockholders"/"shareholders"
Generally Accepted Accounting Principles (GAAP) Goal: to provide useful information to
those making investment and lending decisions
List of Accounting Principles 1) Entity Concept: a business is separate from its owner
2) Reliability: accounting information is accurate and free from bias
3) Cost: assets are recorded at purchase price
4) Going Concern: assumption that business will continue indefinitely
5) Monetary Unit: in the US amounts are recorded in dollars, the dollar is considered a stable
unit of measure
The Accounting Equation Assets = Liabilities + Stockholders' Equity
Assets Economic resources that have a future benefit
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