Questions and Answers
What are the primary functions of accounting?
communicate information to decision makers, measure a company's activities
Which of the following items are assets? (Select all that apply)
What type of business organization is legally separate from its owners and issues shares of stock?
Identify the three most common forms of business organization.
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What are the three types of business activities of a company in financial accounting?
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What are amounts owed to creditors called?
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What do you call the owners' claims to the resources of a company for a corporation?
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What is a business organization that is legally separate from its owners?
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What are the three most common forms of business organization?
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What is the accounting equation?
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Any amount owed to a creditor is classified in the balance sheet as a?
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What is the fundamental model of business valuation commonly referred to as?
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____________________ activities involve purchasing goods from suppliers, designing and manufacturing products, and selling products to customers.
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What is stockholders' equity?
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What are revenues?
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What is an advantage of the corporate form of organization?
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What are expenses?
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Using the accounting equation, how can stockholders' claims on the resources of the corporation be expressed?
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Study Notes
Functions of Accounting
- Primary functions include communicating information to decision makers and measuring a company's activities.
Assets
- Assets are items such as supplies and equipment.
Business Organization
- A corporation is a form of business organization that is legally separate from its owners and can issue shares of stock.
Common Business Structures
- The three most common forms of business organization are sole proprietorship, partnership, and corporation.
Business Activities in Financial Accounting
- Companies engage in three types of business activities: operating, investing, and financing.
Liabilities
- Liabilities refer to amounts owed to creditors.
Stockholder's Equity
- For a corporation, stockholder's equity represents the owners' claims to the company's resources.
Accounting Equation
- The accounting equation is expressed as: Assets = Liabilities + Stockholders' Equity.
Balance Sheet Classification
- Any amount owed to a creditor is classified as a liability in the balance sheet.
Fundamental Business Valuation Model
- The accounting equation serves as the fundamental model for business valuation.
Operating Activities
- Operating activities involve purchasing goods from suppliers, designing and manufacturing products, and selling products to customers.
Revenue Definition
- Revenues are defined as sales of goods or services to customers.
Corporate Advantages
- One advantage of a corporate structure is that it provides limited liability protection to stockholders.
Expenses
- Expenses are the costs incurred in the process of conducting business necessary for generating revenue.
Stockholders' Claims Representation
- Stockholders' claims on a corporation's resources can be calculated using the formula: Assets - Liabilities.
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Description
Test your knowledge of key accounting concepts with these flashcards. Each card covers fundamental topics, including the functions of accounting, assets, and forms of business organization. Perfect for students looking to reinforce their understanding of accounting principles.
