Types of Businesses
This type of business buys goods and resells them at a higher price.
Merchandising
What is an asset?
An economic resource owned by a business which will provide some future benefits.
Equation analysis sheet is ideal for?
analyzing and recording changes in financial position
Which part of the accounting equation determines how much the owner has?
Owner's Equity
___________ have the first claim on assets.
Creditors
two or more people share the ownership and operation of a business.
Partnership
Assets are placed in the order of their _________.
Liquidity
An employee from the company is asked to leave the company with no compensation, which accounts are affected?
None - it is not a transaction
What are the 2 ways the accounting equation can be written?
A = L + OE
A - L = OE
A customer who buys now but pays later is called a(n):
debtor/accounts receivable
This type of business buys raw materials, converts them into a new product, and sells these products to earn a profit
Manufacturing
The Owner's Equity of a business could be defined as?
the difference between assets and liabilities, the true net worth of any business, the owner's investment in the business.
A business performs a service for one of its customers, the company receives $15 000 cash. Which accounts are affected?
Cash increases, Capital increases
A business has assets of $140,000 and liabilities of $60,000. How much is its owner's equity?
80,000
A ________ _________ is a business paper with a dollar figure that does not cause a change in the financial position to the recipient
Source Document
Limited liability is an advantage for this type of business.
Partnership or Corporation
On a classified balance sheet, current liabilities take ________ than a year to pay off, where as long-term liabilities take _________ than a year to pay off.
less, more
An owner buys herself a new computer that she will use at work valued at 1400 with the company's money.
Equipment increases by 1400, cash decreases by 1400
A business has assets of $230,000 and owner's equity of $120,000, but has chosen to withdraw $20,000. How much is the liabilities?
130,000
Auditing is?
testing a company's records and procedures for accuracy so they can express an opinion on the company's financial statements.
What is a service business?
A service business sells a service to the public, does not make or sell a product as its main activity
On a classified balance sheet, current assets are converted into cash within ________ year, where as long-term assets last ______ than 1 year.
one, longer
A business purchases a new large piece of equipment from a supplier valued at $10 000. Business gives a cash down payment of $6 000 and the remainder of the balance is to be paid at a later date. Which accounts are affected.
Equipment increases by 10,000, cash decreases by 6,000 and A/P increases by 4,000
You will be shown an image of a balance sheet, what are 5 errors?
Misc.
Accounting is?
The classifying, recording, summarizing, and analyzing of financial information.