Forms of Business Organizations
Mowing a lawn, preparing tax returns, and cutting hair are all examples of what type of business?
What is a service business.
All business entities are separate from their owner(s). What is the term for this GAAP assumption?
What is the Business Entity Assumption.
The definition of the Latin word for debit is what?
What is left.
An entrepreneur starts a business with his/her own money. The effect on the accounting equation is what?
What is increase in assets and increase in equity.
The normal balance for Petty Cash is what?
What is Debit.
Buying a finished product and reselling the products to individuals or other businesses is what type of of business?
What is a merchandising business (retail is acceptable.)
For reporting purposes, the life of a business is divided into a specific period(s) of time. What GAAP assumption refers to the time covered by an accounting report?
What is the Accounting Period Assumption.
The account to be credited for a cash sale is what?
What is Sales.
A landscaping business owner mows a lawn and receives cash. The effect on the accounting equation is what?
What is an increase in assets and an increase in equity.
The normal balance for Sales Tax Payable is what?
What is credit.
This business is owned by one person.
What is a sole proprietorship.
Unless there is evidence to the contrary, accountants assume that a business has the ability to survive and operate indefinitely. This GAAP assumption is called what?
What is the Going Concern Assumption.
An owner sold a collection of baseball cards for $1,000 to start a business. The account to be credited when starting a business is what?
What is Owner, Capital or Owner's Equity.
A landscape business owner mows a lawn for Ms. Purple. She will pay later. What is the effect on the accounting equation?
What is increase in assets and increase in equity.
The normal balance for Fees Earned is what?
What is a credit.
Buying raw materials and using labor, this type of business transforms the raw materials into a finished product to sell to individuals or businesses.
What is a manufacturing business.
Three important assumptions are found in GAAP. GAAP stands for what?
What is Generally Acceptable Accounting Principles.
An owner withdrew merchandise inventory from the business for personal reasons. The account to be debited when an owner withdraws anything from the business for personal reasons is what?
What is owner, drawing or owner's draw or owner, withdrawal.
A business owner buys a computer on account. The effect on the accounting equation is what?
What is increase in assets and increase in liabilities.
What is a credit.
This type of business is recognized by law to have a life of its own and must get permission (a charter) from the state to operate.
What is a corporation.
The three GAAP Assumptions are what?
What is Business Entity, Accounting Period, and Going Concern.
A credit customer returned merchandise that had been purchased on credit. The account to be debited is what?
What is Sales Returns and Allowances.
An owner receives money from a credit customer, who is paying off a past-due account. The effect on the accounting equation is what?
What is an increase in the asset called cash and a decrease in the asset called Accounts Receivable; a swapping of assets, so no change in Accounting Equation.
The Normal Balance for Sales Discount is what?
What is a debit.