Accounting Basics: Types of Business and the Accounting Cycle

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Questions and Answers

What is the primary purpose of accounting?

Making financial decisions (correct)
Recording financial transactions
Summarizing and analyzing financial information
Measuring the effectiveness of strategies

What is the main difference between bookkeeping and accounting?

Bookkeepers record, summarize, and analyze financial information, while accountants only record transactions.
Bookkeepers only record financial transactions, while accountants record, summarize, and analyze financial information. (correct)
Bookkeepers focus on making financial decisions, while accountants focus on data collection.
There is no significant difference between bookkeeping and accounting.

Who uses financial information to determine if they can afford to buy a house?

People (correct)
Charities
Bankers
Businesses

Which group uses accounting information to decide how much money they need to fundraise?

Charities (B) Signup and view all the answers

What does data allow organizations to do when strategies are implemented?

Determine how well the solution performs (C) Signup and view all the answers

What is the main difference between bookkeepers and accountants?

Bookkeepers record financial transactions for businesses, while accountants help people and businesses make financial decisions. (B) Signup and view all the answers

Which type of business sells products to its customers?

Merchandising Business (D) Signup and view all the answers

In which form of business ownership does the owner have complete control over the business?

Sole Proprietorship (A) Signup and view all the answers

What does 'unlimited liability' mean in the context of business ownership?

The owners are personally responsible for the liabilities of the business. (B) Signup and view all the answers

Can a business fall into multiple categories? What is an example of this?

Yes, a business can belong to multiple categories. For example, Nike manufactures shoes but also owns its stores where those shoes are sold. (C) Signup and view all the answers