fabm module 2

What is the main advantage of a sole proprietorship?

• Limited talent

• Double Taxation

• Unlimited liability

• Limited liability

Which form of business organization has the advantage of a larger pool of human capital?

• Limited Partnership

• General Partnership

• Limited Liability Partnership

• Limited Liability Company

What is the main disadvantage of a general partnership?

• Unlimited liability

• Mutual agency

• Easier to create than a corporation

• Limited life

What is the main feature of a corporation?

• Limited liability

• Mutual agency

• Unlimited liability

• Transferable ownership rights

Which type of business organization is characterized by the absence of inventory and no production facilities?

• Cooperatives

• Service Companies

• Merchandising Companies

• Manufacturing Companies

What is the main principle that states related revenues and expenses should always go together?

• Accrual Accounting

• Matching Principle

• Use of Judgment and Estimates

• Prudence

Which accounting concept requires the use of reasonable estimates in financial statements preparation?

• Going Concern Assumption

• Use of Judgment and Estimates

• Prudence

• Substance over Form

What does the Going Concern Assumption imply?

• Expenses are recognized in the same period as revenue

• The business is separate from the owners

• The effects of business transactions should be recognized in the period in which they occurred

• The business will not stop in the near future

Which principle requires that the financial statements truthfully represent the financial condition of a company?

• Prudence

• Substance over Form

• Accounting Entity Assumption

• Going Concern Assumption

What is the purpose of Generally Accepted Accounting Principles (GAAP)?

• To achieve consistency and comparability in financial statements

• To defer recognition of expenses in the future

• To enhance the comparability of financial statements worldwide

• To provide a common language of financial reporting