Business Accounting Overview
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Questions and Answers

Which of the following constitutes a service concern in business?

  • Agricultural farm
  • Grocery store
  • Factory
  • Hotel (correct)

Which type of business organization requires at least five persons to form?

  • Cooperative
  • Sole Proprietorship
  • Corporation (correct)
  • Partnership

Accounts Receivable is classified under which category of assets?

  • Current Assets (correct)
  • Non-current Assets
  • Intangible Assets
  • Permanent Assets

Which of the following represents a permanent account?

<p>Liabilities (B)</p> Signup and view all the answers

What does the term 'Credit' signify in accounting?

<p>The value parted with (A)</p> Signup and view all the answers

Flashcards

Manufacturing Business

A business that produces goods using raw materials.

Merchandising Business

A business that buys and sells goods.

Current Asset

Assets expected to be used or turned into cash within one year.

Liability

An obligation of a business to pay money or deliver goods or services.

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Accounting Equation

Assets = Liabilities + Equity

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Study Notes

Nature of Businesses

  • Manufacturing: Factories
  • Merchandising: Retail, buy and sell
  • Service: Laundry, hotels, restaurants, law firms, doctors, freelancing
  • Agriculture

Major Accounts

  • Assets: Resources controlled by the business
    • Current Assets: Cash, cash on hand, inventory, accounts receivable
    • Non-Current Assets Land, building, equipment, furniture and fixtures
  • Liabilities: Obligations of the business
    • Current Liabilities: Short-term obligations (e.g., payables)
    • Long-Term Liabilities: Long-term obligations
  • Equity/Capital: Owners' investment in the business
    • Sole Proprietorship, Partnership, Corporations, Cooperatives

Forms of Business Organizations

  • Sole Proprietorship: Managed by one person.
  • Partnership: Managed by two or more.
  • Corporation: Managed by 5 or more persons.
  • Cooperative

Golden Rules of Accounting

  • Accounting equation: Assets = Liabilities + Equity
  • AWE (Asset, Withdrawal, Expenses = Liabilities, Income, Capital)

5 Point of View

  • Collected (Debit)
  • Paid (Credit)
  • Rendered Services (Credit)
  • Sold (Debit)
  • Purchased (Credit)

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Description

This quiz covers the fundamental aspects of business accounting, including the nature of businesses, major accounts like assets and liabilities, and different forms of business organizations. Test your understanding of key concepts such as accounting equations and the golden rules of accounting.

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