Business Forms

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Questions and Answers

Which of the following is a major form of business discussed in the text?

Sole Proprietorship (correct)

Manufacturing

Service

Merchandising

What type of accounting focuses on daily decision making and planning financial events?

Bookkeeping

Ratio analysis

Financial accounting

Managerial accounting (correct)

What is the difference between a bookkeeper and an accountant?

Bookkeeper focuses on ratio analysis, while an accountant focuses on record keeping.

Accountant enters financial data, while a bookkeeper focuses on internal users. (correct)

Accountant focuses on ratio analysis, while a bookkeeper focuses on record keeping.

Bookkeeper enters financial data, while an accountant focuses on internal users.

What is the first step in the accounting process?

Analyzing Signup and view all the answers

Which financial statement would you find revenue and expenses on?

Income statement Signup and view all the answers

What is the basic accounting equation?

Assets = Liabilities + Owner's Equity Signup and view all the answers

What does the current ratio measure?

Liquidity Signup and view all the answers

What are the three main financial statements utilized?

Balance sheet, income statement, and cash flow statement Signup and view all the answers

What are the major forms of business entities discussed in the text?

Sole Proprietorship, Partnership, and C Corporation Signup and view all the answers

What type of accounting relates to the interpretation of financial statements?

Financial accounting Signup and view all the answers

Which financial statement will show the net profit?

Income statement Signup and view all the answers

What is the formula for calculating the Cost of Goods Sold (COGS)?

Beginning Inventory + Purchases - Ending Inventory = COGS Signup and view all the answers

What does liquidity analysis tell you?

Liquidity analysis represents the ability of a firm to pay its debts Signup and view all the answers

What does profitability analysis tell you?

Profitability analysis represents a company's overall profitability Signup and view all the answers

What does activity analysis tell you?

Activity analysis represents the accounts receivable turnover Signup and view all the answers

What is the difference between gross profit and net profit?

Gross profit is net sales minus the cost of goods sold, while net profit measures the ability of a firm to turn sales revenue into a profit Signup and view all the answers

What is the abbreviation for debit?

DR Signup and view all the answers

What is the abbreviation for credit?

CR Signup and view all the answers

What is a source document?

An invoice Signup and view all the answers

What is the difference between a fiscal year and a calendar year?

A calendar year starts on Jan. 1 and ends on Dec. 31, while a fiscal year can start on any date and end on the same date the following year Signup and view all the answers

Study Notes

Business Forms and Accounting

Major forms of business include sole proprietorships, partnerships, corporations, and limited liability companies (LLCs).
Accounting that focuses on daily decision-making and planning financial events is known as managerial accounting.

Bookkeeper vs. Accountant

A bookkeeper primarily records financial transactions, while an accountant analyzes financial data, prepares statements, and provides insights.

Accounting Process

The first step in the accounting process is identifying and analyzing transactions.

Financial Statements

The income statement contains revenue and expenses.
The three main financial statements are the income statement, balance sheet, and cash flow statement.
The income statement will show the net profit for a specific period.

Basic Accounting Principles

The basic accounting equation is Assets = Liabilities + Equity.
The current ratio measures a company's ability to pay short-term liabilities with its short-term assets.

Financial Analysis

Liquidity analysis assesses a company's capacity to meet its short-term obligations.
Profitability analysis evaluates a company's ability to generate profit relative to its revenue or assets.
Activity analysis looks at how efficiently a business utilizes its assets to produce sales or revenue.

Profit Metrics

Gross profit is the revenue from sales minus the cost of goods sold (COGS), while net profit is what remains after all expenses have been deducted from total revenue.

Accounting Abbreviations

The abbreviation for debit is "Dr."
The abbreviation for credit is "Cr."

Documentation and Timeframes

A source document provides evidence or details of a financial transaction.
A fiscal year is a 12-month period that a company uses for accounting purposes and may not coincide with the calendar year. A calendar year runs from January 1 to December 31.

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Description

This quiz will test your knowledge on the major forms of business, including Sole Proprietorship, Partnership, C Corporation, S Corporation, and The Limited Partnership. It will also cover the three types of business entities, which are manufacturing, service, and merchandising. Additionally, you'll be asked about the differences between managerial and financial accounting. Put your business knowledge to the test with this quiz!