Chapter 1 Business Decisions and Financial Accounting

Which organizational form is the most common in the USA?

• Corporation

• Sole Proprietorship

• Partnership

• Limited Liability Company (LLC)

Which organizational form is the most common in Morocco?

• Corporation

• Sole Proprietorship

• Partnership

• Limited Liability Company (LLC)

In a partnership, who is responsible for the business debts?

• Only the senior partner

• Only the managing partner

• All partners

• No one is liable

What is a characteristic of a corporation?

• Owners are personally liable for debts

• Stockholders are not personally liable for debts

• It's always a public company

• There is no separation between the owners and the entity

What is the basic accounting equation?

• Assets = Liabilities + Stockholders' Equity

• Assets = Liabilities - Stockholders' Equity

• Assets + Liabilities = Stockholders' Equity

• Liabilities = Assets + Stockholders' Equity

What does the term 'assets' refer to in accounting?

• Measurable amounts that the company expects to pay in the future

• Resources the company controls and expects to benefit from in the future

• Financial obligations the company owes to creditors

• Profits earned by the company

Which of the following is considered a liability?

• Equipment

• Supplies

• Notes Payable

• Retained Earnings

Stockholders' equity represents what?

• Owners' claims to the company's resources

• The company's outstanding debts

• The value of physical assets

• Cash reserves of the company

What does the income statement show?

• The company's financial position at a point in time

• The company's revenue and expenses over a period of time

• The company's cash inflows and outflows

• The company's stockholders' equity

What does net income equal to?

• Revenues + Expenses

• Revenues - Expenses

• Revenues - Liabilities

• Expenses - Revenues