Exam (elaborations)
ACG 2021 Patterson FSU Exam 1 (1)
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ACG 2021 Patterson FSU Exam 1 (1)
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ACG 2021 Patterson FSU Exam 1Sole proprietorship - ANS-A business owned by one person. Simple to set up and gives you
control.
Partnership - ANS-A business owned by two or more persons who are associated. Partners
bring unique skills and sometimes the individuals don't have enough resources on their own.
Corporation - ANS-A business organized as a separate legal entity owned by stockholders.
Anyone can become an owner via stocks. Stocks are easy to sell. Easy to raise funds to due to
sale of stock.
Taxes and Legal liability - ANS-The three different forms of business organization have different
tax rates and legal liabilities based on who owns the business.
Accounting; Information system that identifies, records, and communicates the economic events
of an organization to interested users. - ANS-
Users; People who utilise accounting systems. There are two types. Internal and External users.
- ANS-
Internal Users - ANS-Managers who plan, organize and run a business. Finance, marketing,
HR, and management.
External Users - ANS-Investors who use accounting information to make decisions to buy, hold,
or sell stock. Creditors use this info to evaluate risk. Customers, Unions, regulatory agencies,
etc.
Taxing authorities - ANS-External users like the IRS who use accounting info to see if
companies comply with laws.
Ethics in Financial Reporting - ANS-Sarbanes Oxley Act (SOX) Management is held responsible
for accuracy of financial information.
Financing Activities - ANS-Ways a business organization raises money or capital. Two ways.
Through creditors and common stock.
Creditors - ANS-People you owe money to. Like note or bond payable. Taking a loan from a
bank.
Common Stock - ANS-Total amount paid in by stockholders for the shares they purchase.
Selling stock to raise money.
, Dividends - ANS-Cash payments to stockholders.
Investing Activities - ANS-Ways a business uses money to grow or make the business better
through improvements. 4 types of activities.
Assets - ANS-Resources owned by a business that are used up to produce something.
Cash - ANS-MOst important asset owned by a company. Actual money at hand.
PPE - ANS-Property, plant, and equipment. Types of assets.
Investments - ANS-Investing money or material for profit.
Operating Activities - ANS-Ways a business actually runs, and what is needed for the business
to operate. 5 TYPES.
Revenue - ANS-Amounts earned on the sale of products. Three types of revenue. Sales,
service, and interest.
Supplies - ANS-Assets used during day to day operations.
Inventory - ANS-Assets used for future operations.
Account Receivable - ANS-What is owed to the company
Expenses - ANS-Cost of assets used in process of generating revenue. COGS, selling,
marketing, administration, taxes, etc.
Net income - ANS-Revenues exceed Expense
Net Loss - ANS-Expenses exceed Revenue
Financial Statements - ANS-Ways that accounting information is visualised. 4 types in order.
Income sheet, Retained Earnings, Balance Sheet, Cash Flow.
Income Statement - ANS-Revenues - Expenses
Retained Earnings - ANS-How much was retained for future use. Net income, Dividends, and
Retained earnings.
Balance Sheet - ANS-Assets=Liabilities + Equity
Cash Flow - ANS-Cash in and cash out. Operating, INvesting, and Financing.
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