ACG 2021 Test #1 Study Guide (Chapter 1 & 2); Questions & Answers 100% Pass
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Course
ACG 2021
Institution
ACG 2021
ACG 2021 Test #1 Study Guide (Chapter 1 & 2);
Questions & Answers 100% Pass
Accounting Equation CORRECT ANSWER-Assets = Liabilities + Owner's Equity
MUST BE BALANCED
Generally Accepted Accounting Principles (GAAP) CORRECT ANSWER-Financial
accounting is governed by concepts and rules known as ...
Generally Accepted Accounting Principles (GAAP) CORRECT ANSWER-Financial
accounting is governed by concepts and rules known as generally accepted accounting
principles (GAAP). GAAP aims to make information relevant, reliable, and comparable.
International Accounting Standards Board (IASB) CORRECT ANSWER-The International
Accounting Standards Board (IASB), a group (consisting of individuals from many countries that
issues International Financial Reporting Standards (IFRS) that identify preferred accounting
practices.
Issues International Financial Reporting Standards (IFRS)
FASB (Financial Accounting Standards Board) CORRECT ANSWER-a group in the US that
determines the rules for GAAP
the private board that establishes the generally accepted accounting principles used in the
practice of financial accounting
The ________ framework consists of the following:
,ACG 2021 Test #1 Study Guide (Chapter 1 & 2);
Questions & Answers 100% Pass
Objectives—to provide information useful to investors, creditors, and others.
Qualitative Characteristics—to require information that is relevant, reliable, and comparable.
Elements—to define items in financial statements.
Recognition and Measurement—to set criteria that an item must meet for it to be recognized as
an element; and how to measure that element.
Securities and Exchange Commission (SEC) CORRECT ANSWER-The agency of the U.S.
government that oversees U.S. financial markets and accounting standard-setting bodies.
Sole Proprietorship CORRECT ANSWER-is a business owned by one person. The business
is a separate entity for accounting purposes. However, the business is not a separate legal entity
from its owner.
- Easy to set up
- No additional business income tax
- Unlimited liability
- Not a separate entity
- Business ends with owner death and choice
Partnership CORRECT ANSWER-A ___________ a business owned by two or more
people, called partners, which are jointly liable for tax and other obligations. Like a
proprietorship, no special legal requirements must be met in starting a partnership. The only
requirement is an agreement between partners to run a business together. The agreement can
, ACG 2021 Test #1 Study Guide (Chapter 1 & 2);
Questions & Answers 100% Pass
be either oral or written and usually indicates how income and losses are to be shared. A
partnership, like a proprietorship, is not legally separate from its owners.
- 2 or more called partners
- No additional business income tax
- Unlimited liability
- Not a separate entity
- Business ends with partner death and choice
Corporation CORRECT ANSWER-A __________, also called a C corporation, is a business
legally separate from its owner or owners, meaning it is responsible for its own acts and its own
debts. Separate legal status means that a corporation can conduct business with the rights,
duties, and responsibilities of a person. A corporation acts through its managers, who are its
legal agents. Separate legal status also means that its owners, who are called shareholders (or
stockholders), are not personally liable for corporate acts and debts.
- Has limited liability, no consequences
- Additional corporate income tax
- Limited liability. Owners called stockholders/shareholders are not liable for corporate acts and
debts
- a separate entity with the same rights and responsibilities as a person
- indefinite
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