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Accounting I: Chapter 2 Quiz Review

Total questions: 24

Worksheet time: 12mins

Name
Class
Date
1.

  • A business owned by one person.

a)
Sole proprietorship
b)
Limited liability company
c)
Corporation
d)
Partnership
2.

  • A business organizations that is recognized by law to have a life of its own. Must get legal permission from the state to operate. This is called a charter and it gives he business certain rights and privileges.

a)
Sole proprietorship
b)
Limited liability company
c)
Corporation
d)
Partnership
3.

  • A business owned by two or more persons, called ________, who agree to operate the business as co-owners.

a)
Sole proprietorship
b)
Limited liability company
c)
Corporation
d)

Partners,

Partnership

4.

  • Easy to set up

  • All profits go to owner

  • Owner has total control

  • Few regulations to follow

a)

Sole proprietorship

b)
Limited liability company
c)
Corporation
d)

Partnership

5.

  • Easier to raise money

  • Easy to expand

  • Easy to transfer ownership

  • Losses limited to investment

a)

Sole proprietorship

b)
Limited liability company
c)
Corporation
d)

Partnership

6.

  • Easy to start

  • Skills and talents are pooled

  • More money available

a)

Sole proprietorship

b)
Limited liability company
c)
Corporation
d)

Partnership

7.

What is the accounting system?

a)
A system for tracking weather patterns
b)
A system for organizing digital files
c)
A system for recording and summarizing financial transactions
d)
A system for managing human resources
8.

Focuses on reporting information to external users. These reports are prepared using GAAP.

a)
Internal auditing
b)

Financial Accounting

c)
Budgeting
d)
Tax reporting
9.

Focuses on reporting information to internal management. 

a)
financial accounting
b)
cost accounting
c)
tax accounting
d)
management accounting
10.

Define: free enterprise system

a)
A system where the government controls all resources and means of production
b)
A system where resources and means of production are collectively owned by the community
c)
An economic system where individuals have no freedom to make economic decisions
d)
An economic system characterized by private ownership of resources and the means of production, and the freedom of individuals to make economic decisions.
11.

Define: profit

a)
Loss incurred from a business or investment
b)
The amount of money spent on a business or investment
c)
The total revenue of a business
d)
Financial gain or benefit obtained from a business or investment
12.

Define: loss

a)
The act of winning something
b)

is a decrease in net income that is outside the normal operations of the business

c)

a company's net income, or total revenue minus explicit costs.

d)
The act of keeping something
13.

Define: entrepreneur

a)
A person who organizes and operates a business, taking on greater than normal financial risks
b)
A person who works for a large corporation
c)
A person who invests in the stock market
d)
A person who is employed by the government
14.

Define: capital

a)
Capital refers to the capital city of a country
b)
Capital refers to the physical punishment of a criminal
c)
Capital refers to financial assets or the financial value of assets, such as funds held in deposit accounts.
d)
Capital refers to the process of writing in capital letters
15.

Define: service business

a)
A company that provides financial services to other businesses
b)
A company that manufactures goods for sale
c)

  • A company provides a needed service for a fee.

d)
A company that sells products to customers
16.

define: merchandising business

a)
A business that provides services to other businesses
b)
A business that manufactures products from raw materials
c)
A business that only sells products online
d)
A business that buys finished products and resells them to consumers
17.

define: manufacturing business

a)
Agricultural cultivation of crops and livestock
b)
Selling of services without physical products
c)
Production of goods through labor and machinery
d)
Transportation of goods from one place to another
18.

Define: GAAP

a)
Generally Agreed Upon Accounting Protocols
b)
Generally Accepted Accounting Principles
c)
Generally Authorized Accounting Practices
d)
Generally Acknowledged Accounting Procedures
19.

define: financial reports

a)
Formal records of the financial activities and position of a business, person, or other entity
b)
A collection of recipes for cooking different types of food
c)
A summary of the weather forecast for a specific location
d)
Informal notes on the financial activities of a business
20.

define: business entity

a)

a business organizations that is recognized by law to have a life of its own. Must get legal permission from the state to operate. This is called a charter and it gives he business certain rights and privileges.

b)

  • it’s assumed that the business has the ability to survive and operate indefinitely.

c)

  • For reporting purposes, the life of the business is divided into specific periods of time! (Can be months, quarters, or years, for example).

d)

  • Business exists independently of it’s owners personal holdings.

21.

define: accounting period

a)

a business organizations that is recognized by law to have a life of its own. Must get legal permission from the state to operate. This is called a charter and it gives he business certain rights and privileges.

b)

  • it’s assumed that the business has the ability to survive and operate indefinitely.

c)

  • For reporting purposes, the life of the business is divided into specific periods of time! (Can be months, quarters, or years, for example).

d)

  • Business exists independently of it’s owners personal holdings.

22.

define: going concern

a)

a business organizations that is recognized by law to have a life of its own. Must get legal permission from the state to operate. This is called a charter and it gives he business certain rights and privileges.

b)

  • it’s assumed that the business has the ability to survive and operate indefinitely.

c)

  • For reporting purposes, the life of the business is divided into specific periods of time! (Can be months, quarters, or years, for example).

d)

  • Business exists independently of it’s owners personal holdings.

23.

Gives a corporation permission to do business in that state.

a)

Financial reports

b)

GAAP

c)

Charter

d)

Corporation

24.

The standard set of rules that all accountants follow. They are created by the Financial Accounting Standards Board.

a)

Financial reports

b)

GAAP

c)

Charter

d)

Corporation

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