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Questions and Answers
Select the business activity that matches with the description: Transactions related to revenues and expenses.
Select the business activity that matches with the description: Transactions related to revenues and expenses.
Select the business activity that matches with the description: Transactions with lenders and owners.
Select the business activity that matches with the description: Transactions with lenders and owners.
Select the business activity that matches with the description: Transactions involving the purchase and sale of productive assets.
Select the business activity that matches with the description: Transactions involving the purchase and sale of productive assets.
What is a business owned by two or more persons called?
What is a business owned by two or more persons called?
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What is an entity legally separate from its owners called?
What is an entity legally separate from its owners called?
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What is a business owned by a single person called?
What is a business owned by a single person called?
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What term refers to sales of products or services?
What term refers to sales of products or services?
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What are owners' claims to resources known as?
What are owners' claims to resources known as?
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What are distributions to stockholders called?
What are distributions to stockholders called?
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What term refers to the costs of selling products or services?
What term refers to the costs of selling products or services?
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What term signifies the resources of a company?
What term signifies the resources of a company?
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What term refers to amounts owed?
What term refers to amounts owed?
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What classification does Rent Expense fall under?
What classification does Rent Expense fall under?
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What classification does Interest Revenue fall under?
What classification does Interest Revenue fall under?
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What classification do Dividends fall under?
What classification do Dividends fall under?
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What classification does Land used for operations fall under?
What classification does Land used for operations fall under?
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What classification does Accounts Payable fall under?
What classification does Accounts Payable fall under?
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What classification does Utilities Payable fall under?
What classification does Utilities Payable fall under?
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What classification does Cash available for use fall under?
What classification does Cash available for use fall under?
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What classification do Salaries fall under?
What classification do Salaries fall under?
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What classification does Common Stock fall under?
What classification does Common Stock fall under?
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What classification does Service Revenue fall under?
What classification does Service Revenue fall under?
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Provide information that is useful to investors and creditors.
Provide information that is useful to investors and creditors.
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Guarantee that businesses will not go bankrupt.
Guarantee that businesses will not go bankrupt.
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Provide information about resources and claims to resources.
Provide information about resources and claims to resources.
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Prevent competitors from offering lower-priced products.
Prevent competitors from offering lower-priced products.
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Provide information to help users in predicting future cash flows.
Provide information to help users in predicting future cash flows.
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Maximize tax revenue to the federal government.
Maximize tax revenue to the federal government.
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Study Notes
Business Activities
- Operating: Involves transactions related to revenues (sales of products/services) and expenses (costs incurred).
- Financing: Includes transactions with lenders and owners, focusing on raising capital.
- Investing: Pertains to transactions involving the purchase and sale of productive assets (e.g., land, equipment).
Forms of Business Organizations
- Partnership: A business structure owned by two or more individuals sharing profits and liabilities.
- Corporation: A legal entity distinct from its owners, providing limited liability to shareholders.
- Sole Proprietorship: A business owned by a single person bearing full responsibility for profits and debts.
Account Classifications
- Revenues: Income generated from sales of products or services.
- Stockholders' Equity: Represents the owners' claims on the company's assets after all liabilities.
- Dividends: Distributions of a company's earnings to its shareholders.
- Expenses: Costs associated with operating the business, like selling products or services.
- Assets: Resources owned by a company that provide future economic benefit.
- Liabilities: Obligations or amounts owed to creditors.
Account Classification Assignments
- Rent Expense: Classified as an expense related to rent costs.
- Interest Revenue: Recognized as revenue earned from interest on savings.
- Dividends: Payments made to stockholders, categorized as dividends.
- Land: An asset used in business operations.
- Accounts Payable: Owed amounts to suppliers classified as liabilities.
- Utilities Payable: Liabilities for utility services not yet paid.
- Cash: Available cash classified as an asset.
- Salaries: Expense corresponding to employee compensation.
- Common Stock: Represents ownership shares sold to investors, classified as stockholders' equity.
- Service Revenue: Income generated from providing services, classified as revenue.
Objectives of Financial Accounting
- Useful Information: Aims to provide relevant data for investors and creditors to assess business viability.
- Resource Reporting: Offers insights on company resources and claims against them.
- Future Cash Flow Prediction: Aims to furnish information that assists in anticipating future financial performance.
- Bankruptcy Assurance: Does not guarantee business solvency or prevent bankruptcy.
- Tax Maximization: Does not focus on optimizing tax revenue for the government.
- Competitive Pricing Defense: Not aimed at preventing competitors from lowering prices.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Test your understanding of business activities with these flashcards based on Chapter 1. Each card presents a description that you must match to the correct business activity. Perfect for grasping key concepts related to operating and financing activities in business.
