Final Exam Accounting

When comparing a corporation and limited liability company's advantages, how are they similar?

• Limited personal liability, management expertise, and easy to sell

• Limited personal liability, management expertise, and unlimited life

• Limited personal liability, management expertise, and single taxation

• Limited personal liability, management expertise, and easy to raise capital

What are considered advantages of a partnership?

• Easier to form, fewer government regulations, and independence of owners

• Fewer government regulations, access to more capital, limited personal liability

• Fewer government regulations, more management expertise, access to more capital

• Unlimited life, access to more capital, more management expertise

What would best classify Wal-Mart's business form and type? Note the first answer choice identifies the form, second identifies the type.

• Corporation, Manufacturing

• Corporation, Merchandising

• Manufacturing, Corporation

• Merchandising, Corporation

What is the primary role of the Internal Revenue Service?

• Audit Financial Documents

• Protect Investors

• Collect Taxes

• Administers the CPA Exam

Which is the organization that develops generally accepted accounting principles (GAAP)?

• Securities and Exchange Commission (SEC)

• Financial Accounting Standards Board (FASB)

• Internal Revenue Service (IRS)

• American Institute of Certified Public Accountants (AICPA)

What are the purposes of the American Institute of Certified Public Accountants (AICPA)?

• Creates and administers the CPA exam and defines, monitors and enforces audit standards and behavioral guidelines for CPAs.

• Creates and administers the CPA exam, and oversees audits of public companies

• Oversees audits of public companies, develop GAAP standards for CPAs to follow

• Creates and administers the CPA exam, develop GAAP standards for CPAs to follow

Is the United States a part of the International Financial Reporting Standards which is a common global language for business affairs?

• Yes, it is a GAAP requirement

• Yes, but it is being phased out for GAAP

• No, it does not meet GAAP standards

• No, however global companies are familar with them due to doing business abroad.

Journalize the transaction: January 18th, received cash from sales for $6,000.

• Debit Cash $6,000, Credit Revenue $6,000

• Debit Cash $6,000, Credit Accounts Payable $6,000

• Debit Revenue $6,000, Credit Cash $6,000

• Debit Cash $6,000, Credit Accounts Receivable $6,000

What is the fundamental Accounting Equation?

• Assets = Liabilities + Owners Equity

• Liabilities = Assets + Owner's Equity

• Owner's Equity = Assets + Liabilities

• Assets = Liabilities - Owner's Equity

What is the first step in the accounting cycle?

• Collect and verify source documents

• Journalize each transaction chronologically

• Perform a post-closing trial balance to start the new period

• Do a pre-trial balance