Question 1

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once.
-Organized as a separate legal taxable entity

Accepted Answer

Corporations are organized as separate legal entities that are distinct from their owners and are taxable entities on their own.

Question 2

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once.
-Comprises 70% of business entities in the United States

Accepted Answer

Sole proprietorships are the most common type of business entity in the United States, comprising 70% of all businesses.

Question 3

The assets section of the balance sheet normally presents assets in

Accepted Answer

The assets section of the balance sheet is typically presented in the order in which they will be converted into cash or used in operations, known as the order of liquidity. This means that the most liquid assets, such as cash and cash equivalents, are listed first, followed by short-term investments, accounts receivable, inventory, property, plant, and equipment, and then long-term investments and other non-current assets. This order is important for users of the balance sheet to understand the company's ability to meet its short-term obligations and the availability of resources for long-term growth. Alphabetical order and order of dollar amounts do not provide the same level of useful information.

Question 4

Match the following business types with each business listed below. Each may be used more than once.
-A supermarket

Accepted Answer

A supermarket falls under the category of a merchandising business as it mainly deals with the sale of products to customers.

Question 5

Match the following business types with each business listed below. Each may be used more than once.
-A modular homebuilder

Accepted Answer

A modular homebuilder is a manufacturing business as it involves assembling and constructing homes from various components and materials in a factory-like setting before transporting them to the relevant site.

Question 6

If an owner wanted to know how money flowed into and out of the company, which financial statement would the owner use?

Accepted Answer

The statement of cash flows shows the inflows and outflows of cash for a specific period of time, which allows the owner to understand how money flows into and out of the company. The income statement shows the company's revenues and expenses, while the balance sheet shows assets, liabilities, and equity at a specific point in time. The statement of retained earnings shows changes in the company's retained earnings balance.

Question 7

Match the following business types with each business listed below. Each may be used more than once.
-A hospital

Accepted Answer

A hospital is a service business as it primarily provides services such as medical care and treatment to its patients.

Question 8

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once.
-Generates 90% of business revenues

Accepted Answer

A corporation is the most suitable choice for a business generating 90% of its revenues as it offers the advantage of limited liability protection and can raise capital by issuing stocks. Proprietorship and partnership structures do not offer limited liability protection and may not be able to raise capital as effectively as a corporation. An LLC could also be a suitable option but may not be as well-established or well-recognized as a corporation.

Question 9

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once.
-Easy and cheap to organize

Accepted Answer

Proprietorship is the easiest and cheapest form of business entity to organize, as it involves only one person who owns and runs the business.

Question 10

Match the following business types with each business listed below. Each may be used more than once.
-A health club and spa

Accepted Answer

A health club and spa is a service business that provides health and wellness services to its customers, such as fitness classes, personal training, and spa treatments. They do not manufacture or merchandise physical goods.

Question 11

Match the following business types with each business listed below. Each may be used more than once.
-A dressmaking company

Accepted Answer

A dressmaking company is involved in the production of custom or bespoke clothing, which makes it a manufacturing business.

Question 12

Match the following business types with each business listed below. Each may be used more than once.
-A law firm

Accepted Answer

A law firm provides services to clients through legal representation and advice.

Question 13

Match the following business types with each business listed below. Each may be used more than once.
-A tax preparation firm

Accepted Answer

A tax preparation firm provides services to individuals and companies to prepare and file tax returns. It does not manufacture any products or sell physical goods, which makes it a service business.

Question 14

Match the following business types with each business listed below. Each may be used more than once.
-A men's clothing store

Accepted Answer

A men's clothing store typically buys goods (in this case, clothing) from suppliers and sells them to customers without changing their form, which is characteristic of a merchandising business.

Question 15

A financial statement user would determine if a company was profitable or not during a specific period of time by reviewing the

Accepted Answer

The income statement shows the revenue and expenses for a specific period of time, and the resulting net income or loss. This information allows a financial statement user to determine if the company was profitable or not during that period. The balance sheet, statement of cash flows, and statement of retained earnings provide important information about a company's financial position and activities, but do not directly indicate profitability for a specific period of time.

Question 16

Match the following business types with each business listed below. Each may be used more than once.
-An automobile dealer

Accepted Answer

An automobile dealer typically buys vehicles from manufacturers and sells them to the public, making it a merchandising business. They do not manufacture the vehicles nor primarily provide a service related to the creation or modification of a product.

Question 17

All of the following statements regarding the ratio of liabilities to owner's equity are true except

Accepted Answer

C) The higher this ratio, the more leveraged a company is, indicating it may have higher risk due to increased debt. A lower ratio suggests a stronger financial position with less reliance on debt.

Question 18

Given the following data:Dec. 31,Year 2 Dec. 31,Year 1Total liabilities $128,250 $120,000Total owner's equity 95,000 80,000Compute the ratio of liabilities to owner's equity for each year. Round to two decimal places.

Accepted Answer

To calculate the ratio of liabilities to owner's equity, we divide total liabilities by total owner's equity.

For Year 1: 
Ratio of liabilities to owner's equity = Total liabilities / Total owner's equity 
= $120,000 / $80,000 
= 1.50

For Year 2: 
Ratio of liabilities to owner's equity = Total liabilities / Total owner's equity 
= $128,250 / $95,000 
= 1.35

Therefore the ratio of liabilities to owner's equity for each year rounded to two decimal places are 1.50 and 1.35 respectively. The answer is B.

Question 19

Match the following business types with each business listed below. Each may be used more than once.
-A book publisher

Accepted Answer

A book publisher is a manufacturing business because it creates physical products (books) through a production process involving printing, binding, and distribution.

Question 20

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once.
-Owned by two or more individuals

Accepted Answer

Partnerships are owned by two or more individuals. Proprietorships are owned by one individual. Corporations and LLCs can be owned by multiple individuals, but they have a more formalized structure and are subject to different legal and tax rules.

Quiz 1: Introduction to Accounting and Business

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Organized as a separate legal taxable entity

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Comprises 70% of business entities in the United States

The assets section of the balance sheet normally presents assets in

Match the following business types with each business listed below. Each may be used more than once. -A supermarket

Match the following business types with each business listed below. Each may be used more than once. -A modular homebuilder

If an owner wanted to know how money flowed into and out of the company, which financial statement would the owner use?

Match the following business types with each business listed below. Each may be used more than once. -A hospital

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Generates 90% of business revenues

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Easy and cheap to organize

Match the following business types with each business listed below. Each may be used more than once. -A health club and spa

Match the following business types with each business listed below. Each may be used more than once. -A dressmaking company

Match the following business types with each business listed below. Each may be used more than once. -A law firm

Match the following business types with each business listed below. Each may be used more than once. -A tax preparation firm

Match the following business types with each business listed below. Each may be used more than once. -A men's clothing store

A financial statement user would determine if a company was profitable or not during a specific period of time by reviewing the

Match the following business types with each business listed below. Each may be used more than once. -An automobile dealer

All of the following statements regarding the ratio of liabilities to owner's equity are true except

Given the following data:Dec. 31,Year 2 Dec. 31,Year 1Total liabilities $128,250 $120,000Total owner's equity 95,000 80,000Compute the ratio of liabilities to owner's equity for each year. Round to two decimal places.

Match the following business types with each business listed below. Each may be used more than once. -A book publisher

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Owned by two or more individuals