Exam (elaborations)
Accounting Exam 1 Review Questions and Answers
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- Accounting
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- Accounting
Accounting Exam 1 Review Questions and Answers
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Accounting Exam 1 Review Questionsand Answers
What is the difference between financial and managerial accounting? - Answer-
Financial accounting provides information for external users (investors, creditors, etc),
while managerial provides information for internal users (managers)
What are the different types of businesses? (4) - Answer-Proprietorship, Partnership,
LLC, and Corporation
What are some features of corporations? - Answer-Limited liability for investors, ability
to make contracts in its own name, ownership rights proportional to shares, articles of
incorporation
What are some features of a proprietorship? - Answer-Single owner, personal liability
for owner for business debts, no taxpaying entity
What are some features of a partnership? - Answer-Partners in ownership, personal
liability of owner for business debts, no taxpaying entity
What are some characteristics of an LLC? - Answer-multiple members are owners, no
personal liability of owner for business debts, no taxpaying entity
What are the Generally Accepted Accounting Principles? (GAAP) - Answer-The
accounting rules used to prepare and standardize the reporting of financial statements
What is the mission of FASB? - Answer-To establish and improve standards of financial
accounting and reporting for the guidance and education of the public, including issuers,
auditors, and users of financial information.
What is the accounting equation? - Answer-Assets = Liabilities + Owner's Equity
What is owner's equity? - Answer-Common Stock + Retained Earnings
What is comparability? - Answer-The ability to compare financial information across
firms
How do we calculate net income? - Answer-Revenues - Expenses
What are the different types of financial statements? - Answer-Balance Sheet,
Statement of Retained Earnings, Income Statement, Statement of Cash Flows
What is the consistency principle? - Answer-The ability to compare financial information
across years for a single firm
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