Podcast
Questions and Answers
What is the primary responsibility of public accountants?
What is the primary responsibility of public accountants?
Net income causes a decrease in retained earnings.
Net income causes a decrease in retained earnings.
False
What is considered an asset?
What is considered an asset?
Land
Which of the following is a characteristic of proprietorship?
Which of the following is a characteristic of proprietorship?
Signup and view all the answers
Who are considered internal users of accounting data?
Who are considered internal users of accounting data?
Signup and view all the answers
Which entity is responsible for requiring publicly traded companies to disclose financial data?
Which entity is responsible for requiring publicly traded companies to disclose financial data?
Signup and view all the answers
The formula for ending owner's capital balance is: Ending Capital = Beginning Capital + Net Income - ______.
The formula for ending owner's capital balance is: Ending Capital = Beginning Capital + Net Income - ______.
Signup and view all the answers
Liabilities represent future obligations or debts.
Liabilities represent future obligations or debts.
Signup and view all the answers
Match the following terms to their definitions:
Match the following terms to their definitions:
Signup and view all the answers
Study Notes
Public vs Private Accounting
- Public accountants work in auditing, income tax, and management advisory services.
- Private accountants work in managerial and cost accounting functions.
Accounting Equation
- Assets = Liabilities + Owner's Equity
- Net income increases retained earnings.
- Losses and dividends decrease retained earnings.
- Investments by stockholders increase capital stock, not retained earnings.
Basic Accounting Terms
- Expense: Cost of assets consumed or services used
- Revenue: Income earned from business operations
- Liability: Future obligation or debt
- Asset: Resource with future economic benefit
Types of Businesses
-
Proprietorship (Sole Proprietorship): Owned by one person.
- Owner is often the manager/operator.
- Owner receives all profits, incurs all losses, and is personally liable for all debts.
-
Partnership: Owned by two or more individuals.
- Partners share profits, losses and responsibilities.
- Generally has unlimited personal liability for each partner.
-
Corporation: Ownership is divided into shares of stock.
- A corporation is a separate legal entity from its owners.
- Owners (stockholders) have limited liability.
Internal Users of Accounting Data
- Owners
- Managers
- Employees
- Executives
- Department Heads
External Users of Accounting Data
- Investors
- Creditors
- Regulatory Agencies
- Tax Authorities
- Customers
- Labor Unions
- General Public
Identifying Assets
- Cash owned by the company is an asset, but not the only one.
- Buildings, cash, inventory, and accounts receivable are all considered assets.
- Sales revenue, owner's capital, operating expenses, drawings, and accounts payable are not assets.
Ending Owner's Capital Balance Formula
- Ending Capital = Beginning Capital + Net Income (or Net Loss) - Withdrawals
- Net Income = Revenues - Expenses
Balance Sheet
- Reports a company's financial position at a specific point in time.
- Presents the company's assets, liabilities, and owner's equity.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Related Documents
Description
This quiz explores key concepts in public and private accounting, including fundamental accounting terms and the essential accounting equation. Additionally, it covers various types of business structures such as proprietorships and partnerships. Test your knowledge and understanding of basic accounting principles.
