Exam (elaborations)
Unit 1.0 Fundamentals of Accounting and Bookkeeping Questions and Answers 2024
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Unit 1.0 Fundamentals of Accounting and Bookkeeping
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Unit 1.0 Fundamentals of Accountingand Bookkeeping
Proprietorship / Sole Prop - answer A business owned by one person. Simplest
structure and not separate from its owner for legal purposes
Partnership - answer Business owned by two or more persons; the owners are called
partners. Not a separate legal entity. Profit/Loss "Pass through" to owners.
Corporation - answer Business organized as a separate legal entity
Limited Liability Company "LLC" - answer Separate Business and legal entity, but
choice of how it is taxed. LLCs are fairly new structures.
10 Steps of Accounting Cycle - answer1) Business transaction occur and source
documents are created
2) Analyze business transactions
3) record/Journalize the business transactions in the journals
4) Post the journals to general ledger accounts
5) Prepare a trial balance
6) Analyze the accounts, journalize and post adjusting entries
7) Prepare an adjusted trial balance
8) Prepare Financial Statements
9) Journalize and post-closing entries
10) Prepare a post-closing trial balance
Accounting Transaction - answer Business event that has a monetary impact, such as
selling goods to a customer or buying supplies from a vendor.
Cash Account (definition) - answer Current balance of cash held by a business, usually
in checking or savings accounts. ASSET / Debit balance
Accounts Receivable (definition) - answerSales on credit, which customers must pay for
at a later date. ASSET / Debit balance
Inventory (definition) - answerThis is items held in stock, for eventual sale to customers.
ASSET / Debit balance
Fixed Assets (definition) - answerMore expensive assets that the business plans to use
for multiple years. ASSET / Debit balance
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