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Questions and Answers
Which of the following constitutes a service concern in business?
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?
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?
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?
Which of the following represents a permanent account?
What does the term 'Credit' signify in accounting?
What does the term 'Credit' signify in accounting?
Flashcards
Manufacturing Business
Manufacturing Business
A business that produces goods using raw materials.
Merchandising Business
Merchandising Business
A business that buys and sells goods.
Current Asset
Current Asset
Assets expected to be used or turned into cash within one year.
Liability
Liability
An obligation of a business to pay money or deliver goods or services.
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Accounting Equation
Accounting Equation
Assets = Liabilities + Equity
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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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