Review for TSA (Accounting) chapters 1,2,3,4,5,6,14,16,17

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NickCunningham
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271346
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Review for TSA (Accounting) chapters 1,2,3,4,5,6,14,16,17
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2014-04-22 01:23:21
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Accounting TSA NorthTech HighSchool
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Accounting TSA
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  1. To whom own a sole proprietorship?
    How difficult is the start-up?
    How much paperwork do you need completed?
    • Only one owner
    • Easy
    • Little to none
  2. To whom own a Partnership?
    How difficult is the start-up?
    How much paperwork do you need completed?
    • Owned by two or more persons
    • Easy
    • Written Legal partnership agreement
  3. To whom own a Corporation?
    How difficult is the start-up?
    How much paperwork do you need completed?
    • Can be owned by shareholders or stockholders
    • Costly
    • Lots of paperwork required
  4. Describe the advantages and disadvantages of a sole proprietorship
    • Advantages - Easy to start, all profits go to owner, owner has total control, Few regulations to follow 
    • Disadvantages - Limited expertise, hard to raise money, owner has all the risks hard to attract talented employees
  5. Describe the advantages and disadvantages of a Partnership
    • Advantages - Easy start, Pooled skills and talents, more money available
    • Disadvantages - Risk of partner conflict, shared profits, shared risks
  6. Describe the advantages and disadvantages of a Corporation
    • Advantages - Easier to raise money, easy to expand, easy to transfer ownership, losses limited to investment
    • Disadvantages - More cost to start, more complex to organize, more regulations, higher taxes
  7. What is Business Entity?
    A business exists separately from the personal finances of the owner
  8. What is Accounting Period?
    The life of the business is divided into specific periods of time covered by accounting reports
  9. What is Going Concern?
    A business has the ability to survive and operate indefinitely unless there is evidence otherwise
  10. True or False: Each business follows accounting rules(or principles) that are specific to its particular needs.
    Every business follows GAAP (Generally Accepted Accounting Principles)
  11. The financial affairs of a business and the financial affairs of the owner should be
    A) Kept totally separate
    B) Combined in the firm's accounting records
    C)Combined in the owner's accounting records
    D) Reported in different parts of the firm's accounting records
    A) Kept totally separate
  12. Governmental Accounting is considered
    A) Cost accounting 
    B) Managerial accounting
    C) Public accounting
    D) Not -for-profit accounting
    D) Not-for-profit accounting 
  13. Which of the following is not a category in the accounting profession?
    A) Accounting education
    B) Private Accounting
    C) Not-for-profit-accounting
    D) Managerial Accounting
    B) Private Accounting
  14. Describe the relationship between property and financial claims
    Property is anything of value that a person or business owns. Property is measured in dollars.

    Financial claims are the legal rights to property and are also measured in dollars
  15. List and define each part of the accounting equation
    • Property = Financial claims 
    • Assets = Liabilities + Owners Equity 
    • Assets - items of value owned by the business 
    • Liabilities - Financial claims of creditors
    • Owners Equity - Financial claims of owners
  16. True or False: Changes in Owner's Equity can result from revenue and expenses.
    True

  17. True or False: Another way to express the basic accounting equation is assets - liabilities = owners's equity
    True 
  18. Amount that a business must pay in the future are known as 
    A) Capital
    B) Accounts payable
    C) Accounts Receivable
    D) Revenue
    B) Accounts Payable

  19. What is a permanent account ?
    Account that carries a balance forward from one accounting period to the next 

  20. What is a temporary account ?
    Account that accumlates dollar amounts for only one accounting period and then starts each new accounting period with a zero balance 
  21. Revenue, expense, and withdrawls accounts are called 
    A) temporary capital accounts 
    B) Permanent accounts
    C) Principal account 
    D) Double entry account
    A) temporary capital accounts

  22. An example of a permanent account is 
    A) Rent expense 
    B) Supplies 
    C) Professional fees
    D) All of the above
    B) Supplies 

  23. Why are specials journals used ?
    Special Journals have amount columns that are used to record debits and credits to specific general ledger accounts
  24. What are the different types of special journals and what are they used for ?
    • Sales journal - sale of merchandise on account 
    • Cash receipts - receipt of cash 
    • Purchases journal - purchase of any asset on account 
    • Cash payments journal - payment of cash including payment by check
  25. what do you do next after you record transactions in sales and cash receipts journals ?
    Post from the sales journal to customer accounts in the accounts receivable subsidiary ledger

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