Podcast
Questions and Answers
Which type of business provides skills and expertise in exchange for fees?
Which type of business provides skills and expertise in exchange for fees?
- Limited Liability Company
- Service (correct)
- Merchandising
- Manufacturing
What defines a merchandising business?
What defines a merchandising business?
- Operates under a cooperative model with shared profits
- Sells products at a retail price after buying at wholesale (correct)
- Runs with a single owner without legal separation
- Transforms raw materials into finished products
What is a unique characteristic of a corporation?
What is a unique characteristic of a corporation?
- Operates without sharing profits
- Only pays taxes based on personal income
- Owned and run by a single individual
- Separate legal entity from its owners (correct)
Which business structure is known for being the easiest type to start?
Which business structure is known for being the easiest type to start?
In which type of business do profits and benefits get shared among a group of people?
In which type of business do profits and benefits get shared among a group of people?
What is the primary focus of managerial accounting?
What is the primary focus of managerial accounting?
Which type of accounting specializes in tracking the proper utilization of funds for guardians or custodians?
Which type of accounting specializes in tracking the proper utilization of funds for guardians or custodians?
What is the main objective of auditing in a business?
What is the main objective of auditing in a business?
Which branch of accounting is most closely associated with legal issues such as fraud or bankruptcy?
Which branch of accounting is most closely associated with legal issues such as fraud or bankruptcy?
What does tax accounting primarily aim to assist businesses with?
What does tax accounting primarily aim to assist businesses with?
What does project accounting primarily track?
What does project accounting primarily track?
Which accounting branch focuses on ensuring compliance with political donation regulations?
Which accounting branch focuses on ensuring compliance with political donation regulations?
In which branch of accounting does the focus on budget adherence across government agencies occur?
In which branch of accounting does the focus on budget adherence across government agencies occur?
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Study Notes
Branches of Accounting
- Financial Accounting tracks a business's financial performance by recording transactions and creating financial statements.
- Managerial Accounting helps company management make sound decisions and improve profits by focusing on the use of money.
- Cost Accounting, a subset of management accounting, analyzes project or product costs to determine their true value.
- Auditing checks a business's financial performance, either externally by an independent auditor or internally by a person within the company.
- Tax Accounting helps businesses understand tax implications, provides tax reduction advice, and calculates taxes based on business type.
- Fiduciary Accounting tracks money inflows and outflows to ensure proper fund utilization and is frequently used by guardians or custodians.
- Project Accounting monitors project costs and provides regular performance reports to aid in future decisions.
- Forensic Accounting, also known as legal accounting, addresses legal issues like bankruptcy, fraud, and mismanagement.
- Fund Accounting ensures proper allocation of funds in non-profit organizations (NPOs).
- Government Accounting tracks government agency funding to ensure budget adherence across various sectors like healthcare, housing, and education.
- Political Campaign Accounting monitors donations and transactions in campaigns to comply with federal and state laws for local, state, and national elections.
- International Accounting assists businesses in understanding the laws and regulations of other countries for global expansion.
Types of Business
- Service businesses provide skills and expertise in exchange for fees. Examples include accounting, legal services, personal services, automotive repairs, fitness facilities, hospitals, schools, hotels, and more.
- Merchandising businesses buy products wholesale and sell them at retail prices, generating profit by marking up the cost.
- Manufacturing businesses transform raw materials into new products by combining materials, labor, and overhead costs, selling the finished goods to customers.
Business Organizations
- Partnership businesses involve two or more people working together, with responsibilities shared equally in a general partnership or with limited roles in a limited partnership.
- Corporations are separate legal entities from their owners, called shareholders. They pay their own taxes before sharing profits with the owners.
- Sole proprietorships are simple to establish with one person owning and operating the business, with no distinction between the business and the owner.
- Cooperative businesses are owned and operated by a group of people working towards a shared goal, with profits and benefits shared among them.
- Limited Liability Companies (LLCs) are popular for small businesses, offering flexibility in management and acting as separate legal entities.
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